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Alumina prices in the short term or overfall rebound

February 25, 2025
Recently, alumina prices have maintained a downward trend, but the downward speed has slowed down compared with the previous period. Combined with the fundamentals of alumina, as well as the corresponding data on the disk, the short-term space for alumina prices is limited, and the probability of overfalling and rebounding is larger, but in the medium and long term, affected by capacity factors, the downward trend of the center of gravity does not change.
 
Smelting profits fell quickly
 
The news of production delay and maintenance reduction appeared
 
From the domestic alumina spot price data, alumina prices peaked in mid-December last year after 5700 yuan/ton, quickly and sharply fell, the current, the latest average price of alumina spot about 3400 yuan/ton, nearly two months down 1300 yuan/ton, down 40%. Alumina spot prices fell sharply and quickly, but the cost component reaction is relatively slower, therefore, smelting profits are also high down, after entering February, alumina smelting profits are turned into a loss, the current loss of about 260 yuan/ton, compared with the peak state of profit 1600 yuan/ton has a great change.
 
From the plan of domestic alumina new capacity in 2025, there are new alumina production capacity in each quarter this year: 4 million tons of new capacity in the first quarter, of which, Shanxi has 1 million tons of production resumption, Shandong has 1 million tons of replacement and 1 million tons of new, Guangxi has 1 million tons of new; The second quarter added the most capacity, 5.4 million tons, in addition to 1 million tons is replacement, the other 4.4 million tons are all new; The third quarter added the least capacity, 3.2 million tons; It rose again to 5.2 million tonnes in the fourth quarter.
 
With the rapid decline in the spot price of alumina, the smelting profits of enterprises have turned from profit to loss, and there have been two news in recent times in terms of production capacity: one is the delay of the new capacity plan of a smelter in the north, and the other is the planned maintenance of local boilers in a large aluminum oxide plant in Shanxi. Combined with the current smelting profit situation of the industry, the smelter has the power to reduce production, forcing the upstream bauxite to yield profits, or the downstream electrolytic aluminum plant to yield profits, thereby improving the operation of the industry. From the perspective of upstream bauxite prices, in 2024, the price of bauxite in Guinea has risen by more than 40%, about $100 / ton; From the perspective of downstream electrolytic aluminum profits, in the past two months, alumina prices have fallen sharply to more than 1,300 yuan/ton, while electrolytic aluminum prices have rebounded at a low level affected by internal and external factors, and smelting profits have been quickly repaired to more than 2,000 yuan/ton.
 
Export earnings are expanding again
 
Increase in export demand
 
From the point of view of domestic and foreign alumina spot prices, with the peak of domestic alumina spot prices, overseas alumina prices are also lower, and the overall trend is consistent, but the range is different.
 
Overseas alumina spot prices are more resilient, mainly for two reasons: First, in 2025, overseas alumina new capacity is relatively less than domestic, expected to suppress less; Second, the recent overseas tariff policy has led to a stronger short-term aluminum price performance, which has a certain driving effect on overseas alumina prices. Under this difference, domestic alumina export earnings have expanded again, returning to the level in October 2024, exceeding 1,300 yuan/ton, which is bound to boost domestic alumina export demand again in the short term.
 
Downstream electrolytic aluminum production capacity is at a high level
 
Some capacity is expected to resume production
 
From the domestic electrolytic aluminum production capacity data, as of January, the total domestic electrolytic aluminum production capacity of 45.172 million tons, an increase of 70,000 tons from the previous month; Domestic electrolytic aluminum production capacity of 43.854 million tons, down 10,000 tons from the previous month; The utilization rate of electrolytic aluminum capacity was 97.73%, and the operating rate of enterprises was 97.08%, which decreased slightly from the previous quarter. From the perspective of domestic electrolytic aluminum smelting profits, recently, electrolytic aluminum smelting profits turned losses into profits, and quickly recovered to more than 2000 yuan/ton. Overall, with the recovery of profits, electrolytic aluminum smelters have the power to increase operating capacity, although the space is relatively limited, but it is still a plus for alumina demand. According to institutional research information shows that recently, the domestic electrolytic aluminum operating capacity has increased slightly, the early production reduction capacity in Sichuan is gradually restarted, and most of the production capacity is expected to be fully put into operation by the end of March, among which, an electrolytic aluminum plant in Guangxi that has lost production is also recently resumed production, and the total production capacity is about 300,000 tons/year.
 
After the year, although the disk maintained a downward trend
 
But positions have rebounded
 
From the point of view of the amount of alumina varieties and price changes, when the price of alumina reached 5400 yuan/ton, the amount of alumina holdings began to continue to decline, and the accelerated decline of alumina prices in January was also accompanied by an accelerated reduction in the amount of holdings. The reason is, on the one hand, the fundamental supply and demand balance has reversed, from shortage to surplus, resulting in the rapid exit of bulls; On the other hand, during the Spring Festival holiday, both sides reduced their positions to avoid risk. After the Spring Festival, although alumina prices continue to fall trend, but the amount of holdings in about 190,000 began to bottom out, compared with the sharp decline under the long cut in January, the current mood has improved, bottom-diving funds began to flow in. From the data of the option variety fear index (VIX), in January, the VIX index fluctuated in a narrow range between 26 and 31, and the VIX index opened high to 34.44 on the first trading day after the Spring Festival, and then continued to decline, which means that the fund behavior of the option side has gradually changed from aggressive buyers to conservative sellers. Combined with the two aspects of the data, the space below the alumina plate price is limited in the short term, and the probability of bottoming is greater.
 
In the short term, the space below the alumina plate price is limited, and the probability of bottoming out is greater. As the spot price of alumina and the plate synchronously fell sharply, the smelting end quickly moved from profit to loss, so that the smelter has the power of maintenance and production reduction and delay of new capacity; Although overseas alumina prices and domestic to keep pace with the decline, but the decline is relatively small, so that domestic export profits rapidly expanded to more than 1300 yuan/ton, domestic alumina export demand increased; Nearly 2 months, the domestic alumina prices and electrolytic aluminum prices differentiation, so that electrolytic aluminum smelter profits quickly repair to more than 2000 yuan/ton, the smelting capacity of the early production due to losses began to gradually resume production, is expected to resume production capacity of about 300,000 tons/year, the increase is relatively limited, but also the increase in marginal demand for alumina points; Plate variety holdings bottomed out after the Spring Festival, long funds began to flow in near 3,500 yuan/ton, combined with the option variety VIX to maintain a narrow range of weak volatility, is expected to be limited space below the price of alumina in the short term.
 
In the medium and long term, the shift in the price of alumina is still the main line. The core reason is that new capacity is put into production, and there are new capacity inputs every quarter in 2025, as long as the bauxite supply is not a problem, in the case of smelting profits, the possibility of domestic smelter capacity plan changes is low. In this context, domestic alumina will maintain a surplus state, and the price center of gravity is bound to move down.