SMM: Spot alumina transaction price decline narrows; significant north-south price spread leads to northern goods transported south

Recently, the weekly operating rate of alumina has continued to increase slightly, with no significant changes on the demand side. The price centre of recent spot alumina transaction prices remains on a downward trend, but the decline has narrowed compared to earlier periods. As of now, alumina capacity has not entered a large-scale loss-making state. It is expected that the short-term operating rate of alumina will remain high, with the supply and demand fundamentals maintaining a slight surplus. Overall, spot alumina prices are expected to continue their downward trend in the short term. Close attention should be paid to bauxite transaction prices, alumina costs, and overseas spot alumina prices in the near term.

In the overnight session, the most-traded alumina 2502 contract opened at RMB 3,832 per tonne, reached a high of RMB 3,861 per tonne and a low of RMB 3,804 per tonne, and finally closed at RMB 3,838 per tonne, down RMB 36 per tonne or 0.94 per cent. Open interest stood at 72,300 lots.

For, spot alumina transactions, in Henan, 5,000 tonnes of spot alumina were traded at a transaction price of RMB 3,950 per tonne. In Guizhou, 3,000 tonnes of spot alumina were traded at RMB 4,300 per tonne. In Guangxi, 10,000 tonnes of spot alumina (originating from Shanxi) were traded at RMB 4,300 per tonne delivered to Guangxi.

Industry News

1. According to SMM, starting January 22, a major alumina refinery in Shandong adjusted its purchase price for 32 per cent ion membrane liquid caustic soda, increasing it by RMB 20 per tonne from RMB 890 per tonne to RMB 910 per tonne under the two-invoice system (equivalent to a price of approximately RMB 2,844 per tonne on a 100 per cent basis).
2. On the evening of January 20, Tianshan Aluminum released its 2024 performance forecast. The announcement indicated that the company expects to achieve a net profit attributable to shareholders of publicly listed firms of 4.45 billion yuan in 2024, up 101.79 per cent Y-o-Y. Tianshan Aluminum attributed the significant profit growth to a YoY increase of approximately 40 per cent in the average external selling price of self-produced alumina, a YoY production increase of about 7.5 per cent, and a substantial Y-o-Y profit growth in the alumina segment.

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 on January 21, the SMM alumina index showed a premium of RMB 515 per tonne against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report

On January 21, the total registered warehouse warrants for alumina decreased by 2,701 tonnes from the previous trading day to 38,800 tonnes. In Shandong, the total registered warehouse warrants remained unchanged at 901 mt. In Henan, they remained unchanged at 12,000 tonnes. In Guangxi and Gansu, the total registered warehouse warrants remained at 0 tonne. In Xinjiang, the total registered warehouse warrants decreased by 2,701 tonnes to 25,900 tonnes.

Overseas Market

As of January 21, the FOB Western Australia alumina price was $573 per tonne, with an ocean freight rate of $20.9 per tonne. The USD/CNY exchange rate sell price was around 7.30. This price translates to an external selling price of approximately RMB 4,981 per tonne at major domestic ports, RMB 673 per tonne higher than domestic alumina prices, keeping the alumina import window closed.

Source: SMM