The spot-futures price spread narrowed to a discount of RMB 19/t, domestic alumina exports may have been halted

Futures market: During the night session, the most-traded alumina 2505 futures contract opened at RMB 3,400 per tonne, with a high of RMB 3,420 per tonne and a low of RMB 3,391 per tonne, eventually closing at RMB 3,402 per tonne, up RMB 18 per tonne or 0.52 per cent, with an open interest of 166,000 lots.

Ore market: As of February 24, the SMM Imported Bauxite Index stood at USD 96.42 per tonne, flat from the previous trading day. The SMM Guinea Bauxite CIF average price was USD 95 per tonne, unchanged from the previous trading day, while the SMM Australian Bauxite CIF average price also remained at USD 95 per tonne.

Industry news:

Russia and the US could agree to a 50 per cent arms reduction and plan to resume aluminium product exports to the US. On February 25, local time on the 24th, Russian President Vladimir Putin stated that Ukrainian President Volodymyr Zelensky is avoiding peace talks, as such talks would necessitate lifting the wartime state and holding elections in Ukraine. However, Zelensky's current approval rating is only half that of Valerii Zaluzhnyi, the former Commander-in-Chief of the Ukrainian Armed Forces and now Ambassador to the UK.

Putin mentioned that Zelensky's decree prohibiting negotiations with Russia has cornered him. Putin also emphasized that Russia does not oppose Ukraine's statehood but believes its territory should not be used as a hostile base against Russia. He called for European countries to participate in negotiations related to the Ukraine issue. He noted that he and former US President Donald Trump had not engaged in substantive discussions on resolving the Ukraine conflict.

Putin revealed that Russia and the US could agree to a 50 per cent reduction in arms. He also mentioned that companies from both countries have begun discussing cooperative projects, and Russia plans to resume aluminium product exports to the US, with an export volume of 2 million tonnes, which would help stabilise the product's price.

Aluminium ingot inventory: Despite improved market liquidity after the Lantern Festival and increased aluminium ingot outflows from warehouses over the past week, totalling 119,100 tonnes (up 7,600 tonnes W-o-W), domestic aluminium ingot inventory continued its post-holiday buildup. According to SMM data, as of February 24, 2025, the domestic social inventory of aluminium ingots reached 873,000 tonnes, with available inventory climbing to 747,000 tonnes, up 28,000 tonnes from last Thursday. The inventory buildup pace has not slowed. Notably, Y-o-Y, the post-Chinese New Year second-week aluminium ingot inventory increase exceeded last year's level, with the buildup intensity ranking among the highest in the past seven years. The current inventory buildup slightly exceeded expectations.

Spot-futures price spread daily report: According to SMM data, on February 24, the SMM Alumina Index showed a discount of RMB 19 per tonne against the most-traded contract's latest transaction price at 11:30.

Warehouse warrants daily report: On February 24, the total registered warehouse warrants for alumina increased by 895 tonnes from the previous trading day to 94,900 tonnes. In Shandong, the total registered warehouse warrants remained unchanged at 4,513 tonnes. In Henan, the total registered warehouse warrants also remained unchanged at 18,000 tonnes. In Guangxi and Gansu, the total registered warehouse warrants stayed at 0 tonne. In Xinjiang, the total registered warehouse warrants increased by 895 tonnes to 72,300 tonnes.

Overseas market: As of February 24, the FOB Western Australia alumina price was USD 485 per tonne, with ocean freight at USD 19.85 per tonne. The USD/CNY exchange rate sell price was around 7.26. This price translates to an external selling price of approximately RMB 4,222 per tonne at major domestic ports, RMB 865 per tonne higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, there have been reports of minor alumina production cuts and maintenance in northern China, coupled with concentrated news of domestic alumina exports, which have boosted alumina prices and improved market sentiment.

This week, spot alumina prices rebounded slightly. However, with the slight rebound in domestic spot alumina prices and the decline in overseas spot alumina prices, the domestic alumina export window has gradually closed. Currently, alumina's operating capacity remains high, while the incremental demand for aluminium is limited.

The fundamental structure has not yet fully shifted, and resistance at the top of alumina prices persists. In the short term, alumina prices may enter a phase of fluctuation and adjustment. Continuous attention should be paid to the alumina export window and changes in alumina operating capacity.

Source; SMM