Mine quotations lowered, alumina may continue downward trend

Futures market: During the night session, the most-traded alumina 2505 contract opened at RMb 3,429 per tonne, reached a high of RMB 3,429 per tonne, a low of RMB 3,383 per tonne, and closed at RMB 3,401 per tonne, down 0.82 per cent. Open interest stood at 167,000 lots, an increase of 4,173 lots.

Spot price: On February 17, SMM alumina was quoted at RMB 3,331 per tonne, down RMB 25 per tonne from the previous trading day.

Ore market: Demand side, spot alumina prices continued to decline, and alumina refineries lowered their acceptance of high-priced bauxite. According to SMM, buyers generally reported being unable to accept imported Guinean bauxite priced above USD 100 per tonne.

Supply-side, suppliers adjusted their quotes downward from highs. SMM learned that some suppliers' quotes have fallen below USD 100 per tonne. However, considering the new alumina capacity and the rigid demand for alumina production, suppliers still showed some sentiment to stand firm on quotes.

Recently, no new bauxite transactions were reported, but both buyers and sellers lowered their quotes, and bauxite prices pulled back from highs. As of February 17, the SMM imported bauxite index was USD 98.23 per tonne, down USD 9.28 per tonne W-o-W. The SMM Guinean bauxite CIF average price was USD 97 per tonne, down USD 11 per tonne W-o-W.

Industry dynamics: On February 17, 25,000 tonnes of alumina was traded overseas at a transaction price of USD 510 per tonne FOB Go Dau, Vietnam, for March shipment.

Spot-futures price spread daily report: According to SMM data, on February 17, the SMM alumina index was at a discount of RMB 73 per tonne against the most-traded contract's latest transaction price at 11:30.

Warehouse warrant daily report: On February 17, the total registered volume of alumina warehouse warrants increased by 40,524 tonnes from the previous trading day to 95,500 tonnes. In Shandong, the total registered volume remained unchanged at 4,513 tonnes. In Henan, the total registered volume increased by 18,008 tonnes to 18,000 tonnes. In Guangxi, the total registered volume remained unchanged at 0 tonne. In Gansu, the total registered volume remained unchanged at 0 tonne. In Xinjiang, the total registered volume increased by 22,516 mt to 7.3 mt.

Overseas market: As of February 17, the FOB Western Australia alumina price was USD 520 per tonne, with ocean freight at USD 19.70 per tonne. The USD/CNY exchange rate sell price was around 7.27. This price translates to an external selling price of approximately RMB 4,512 per tonne at major domestic ports, which is RMB 1,181 per tonne higher than domestic alumina prices. The alumina import window remained closed.

Summary: Supply side, some alumina refineries in northern China reported maintenance this week, which may slightly impact alumina supply in the short term. Weekly operating rates for alumina slightly decreased by 0.33 percentage points. Demand side, some aluminium production cuts and technological transformation capacities in Sichuan and other regions may gradually resume production, increasing demand for alumina. Cost-side, due to the sharp decline in spot alumina prices, alumina refineries significantly reduced their acceptance of high-priced bauxite, and bauxite suppliers also lowered their quotes. Imported bauxite prices fell, potentially reducing alumina production costs. However, the current spot transaction prices for alumina in northern China are below the theoretical marginal production cost. Overall, large-scale alumina production cuts have not yet occurred, and the spot alumina market remains relatively ample. Spot transaction prices continued to decline and may maintain a downward trend in the short term.

Source: SMM