SMM

In Q4 2024, alumina experienced a rare surge in spot prices. As of December 13, the SMM Alumina Index stood at 5,769 yuan/mt, up 40.4% from 1,661 yuan/mt on October 8, 2024. The reasons are as follows:
1. The alumina fundamentals remained tight, with undersupply driving up alumina prices.
2. Aluminum smelters' alumina inventory continued to decline. Entering winter, winter stockpiling demand boosted spot alumina procurement, pushing prices higher.
3. Overseas alumina prices surged significantly, with the export window opening several times, further driving up domestic spot alumina prices.
By late November, the growth in spot alumina prices gradually slowed. As of December 13, a stable trend began to emerge. The main reasons are as follows:
1. High profitability stimulated strong enthusiasm for alumina production, with alumina output reaching a record high.
2. Overseas alumina prices saw a significant pullback, which to some extent affected market sentiment for alumina.
3. The sharp rise in spot alumina prices pushed up aluminum production costs. According to the SMM aluminum cost model, as of December 12, the average full cost in the aluminum industry reached 21,510 yuan/mt, with an average loss of 1,090 yuan/mt. Under such circumstances, downstream buyers exhibited strong resistance to high prices, leading to cautious spot alumina procurement and relatively sluggish spot transactions.
However, recent disturbances on both the supply and demand sides of alumina have brought some uncertainty to the fundamental trend of alumina.
Supply Side:
Overseas, as of December 13, SMM's FOB price for Western Australian alumina pulled back to $680/mt, equivalent to prices CIF major ports in China of approximately 5,876 yuan/mt, with an import loss of about 107 yuan/mt. The import loss has significantly narrowed. If overseas alumina prices decline further, China's alumina import window may reopen. However, SMM has learned that Alcoa's Pinjarra alumina refinery in Australia (4.7 million mt/year) experienced an unexpected natural gas supply disruption, resulting in a power outage and a significant caustic soda spill. It is expected to take 7–10 days to resume full production. The impact of this incident on alumina production remains uncertain. If the impact is significant, the decline in overseas alumina prices may halt, and China may find it difficult to secure a large volume of imported alumina in the short term.
Domestically, according to SMM, on December 11, 2024, the Xiaoyi Branch of the Lvliang Municipal Bureau of Ecology and Environment issued a "Notice on Strengthening Emission Reduction to Improve Air Quality in the Autumn and Winter of 2024–2025," which includes the alumina industry within its scope of control. The notice requires some alumina refineries to shut down part of their roasting furnaces, which will have a certain impact on the alumina roasting process, potentially leading to a slight decline in production.
Demand Side:
SMM has learned that some aluminum smelters in Sichuan have recently begun production cuts due to high production costs causing losses and their own maintenance needs. These cuts are expected to affect a total aluminum capacity of 205,000 mt/year, which may also lead to a slight decline in alumina demand.
SMM Brief Comment: Disturbances on both the supply and demand sides of alumina may have some impact on the trend of spot alumina prices. However, in the short term, alumina suppliers still have a sentiment to stand firm on quotes, while downstream buyers exhibit strong sentiment of fear of high prices, leading to cautious spot procurement. Spot alumina prices may enter a phase of fluctuating adjustments.