In the first half of this year, the alumina futures market dropped significantly. The main reason was the accelerated resumption of production on the supply side, leading to a shift towards oversupply. However, with some production capacity starting to cut production after cash cost losses and disturbances at overseas mines, the futures price rebounded from a low level. Looking back at the market situation of alumina in the first half of the year, it can roughly be divided into three stages:
Phase One (Beginning of the year - early April) : During this period, the price of alumina showed a relatively smooth downward trend, dropping from above 4,600 to below 2,700, completely erasing all the gains made last year and hitting a new low since its listing. At the beginning of the year, the transportation of Guinean mining enterprises returned to normal. Coupled with the expiration of the control measures on alumina production capacity in the north during autumn and winter, alumina enterprises began to resume production, and the output rose. Gradually, the supply situation shifted from a shortage to an excess. With the rapid decline in prices, manufacturers had a strong pessimistic expectation for the future alumina market. Manufacturers rushed to sell their goods during the high-price window period, and the production capacity was released beyond expectations, resulting in a significant increase in output. The intensification of oversupply has put pressure on alumina and led to a rapid decline.
Phase Two (early April - mid-May) : Alumina stabilized at a low level and rebounded, with the futures price breaking through the 3,200 mark at its highest. With the continuous decline in the price of alumina, a large number of enterprises have suffered losses, and maintenance and production cuts have occurred one after another. The obvious domestic overcapacity situation has shown signs of narrowing since the middle and late April. Moreover, the increasingly concentrated maintenance and production cuts in some regions and the increase in non-aluminum demand have led to a simultaneous decline in the overall spot circulation volume. In addition, in early May, the Wenfeng incident was exposed, followed by disturbances at the Guinea mine end. The enthusiasm for going long was further stimulated.
The third stage (mid-May to the end of June) : During this period, alumina showed a V-shaped trend of first falling and then rising. Due to the temporary tight supply, the price of alumina has rebounded. The recovery of corporate profits has stimulated the resumption of production of maintenance capacity. Coupled with the release of new production capacity, the output of alumina has been released. The expectation of oversupply in the later period is strong, and alumina is under pressure to decline. However, as the futures price continued to fall, the basis expanded, coupled with the continuous decline of the alumina warehouse receipts on the Shanghai Futures Exchange to a relatively low level, and the stabilization and recovery of the cost side ore price, the alumina rebounded slightly from the low level.
Both domestic and international supplies of alumina are in excess
Overall, the domestic capacity and output of alumina in the first half of 2025 showed a growth trend. According to the research and statistics of Mysteel, by the end of May 2025, the domestic built capacity of alumina reached 108.9 million tons per year, remaining unchanged compared with the previous period and increasing by 6.45% year-on-year. The operating capacity reached 84.6 million tons per year, increasing by 0.12% month-on-month and decreasing by 0.82% year-on-year. From January to May 2024, China's cumulative output of alumina was 36.162 million tons, an increase of 9.15% year-on-year. China's alumina output in May was 7.103 million tons, up 1.11% month-on-month and 2.72% year-on-year. However, when viewed on a monthly basis, the supply of alumina has undergone a cycle from surplus to shortage and then back to surplus. At the beginning of the year, the supply of alumina increased significantly, but its price dropped rapidly, causing the profits of enterprises to continuously narrow. Since April, due to the continuous expansion of losses in the alumina industry, many alumina enterprises in various regions have successively started maintenance and production cuts. After entering May, the scale of production cuts has expanded, which has temporarily affected the output of alumina and boosted the price rebound. Overseas, the newly put into operation capacity of alumina this year is significantly less than that in China. The 1 million tons each of Jinjiang and Inalum in Indonesia have been put into operation, while there is still uncertainty regarding the Indian project.
Looking at the whole year, it is reported that the global new production capacity is conservatively expected to increase by more than 16 million tons in 2025, among which the domestic increase is 12.6 million tons, and mainly imported ore will be used. In the second half of the year, domestic alumina enterprises still have expectations of resuming production and operation, and output may continue to rise. According to Mysteel's research and statistics, as of the end of June, the cumulative new capacity of alumina in China has reached 8.2 million tons per year, and there are still 3.6 million tons per year to be put into operation in the second half of the year. Shandong, Hebei and Guangxi have become the main regions for the expansion of domestic alumina production capacity in the past three years. There is also an expectation of increased output on the overseas supply side. New overseas alumina projects are expected to be put into operation one after another by the end of this year and next year. The scale of overseas alumina supply and demand surplus will expand next year, and the resonant surplus of domestic and foreign alumina will continue to put pressure on alumina prices.
The demand for alumina may not show a significant positive trend
As a major downstream product of alumina, electrolytic aluminum has seen the resumption of production at some domestic electrolytic aluminum refineries in the first half of the year. However, due to the limited increase in operating capacity, it has not significantly boosted the demand for alumina. Mysteel predicts that electrolytic aluminum enterprises will maintain a stable and high production trend. The operating capacity of the domestic electrolytic aluminum industry in May is expected to be 44.1283 million tons per year, with a slight increase compared to the previous month. It should be noted that due to the hard constraint of a ceiling of 45.5 million tons for electrolytic aluminum production capacity, the space for subsequent capacity expansion is extremely limited, and there may be no obvious positive factors on the demand side of alumina.
In 2025, the net export situation of China's alumina will continue. The domestic export volume has maintained an increase compared with the same period last year. According to the data from the General Administration of Customs, China's alumina export volume in May 2025 was 207,800 tons, a decrease of 20.96% month-on-month and an increase of 104.63% year-on-year. From January to May 2025, the cumulative export volume reached 1.1723 million tons, representing a year-on-year growth of 79.37%. From January to May 2025, China's cumulative net export volume of alumina was 1.0053 million tons, a year-on-year decrease of 303.60%. The FOB price overseas dropped from the beginning of the year to April. The subsequent rebound was not as significant as that in the domestic market. The import profit and loss narrowed significantly, restricting the net export scale, which was not conducive to the further recovery of domestic prices.
The actual impact of policy disturbances at the mining end in Guinea is limited
In late May, the issue of revocation of mining licenses in Guinea escalated again, and large-scale mining operations were suspended. After investigation and verification by Mysteel, on Friday evening, May 16th Beijing time (Friday morning, Guinea time), the Guinea Mining Authority sent personnel to the Axis mining area to issue a work stoppage order, ordering the mining equipment in the operating mines to suspend operations, and all mining was forced to come to a complete halt. This mining area includes mining companies such as Shunda Mining, with an annual production capacity of approximately 40 million tons. This action is a further escalation of the issue where the Guinean government announced the revocation of mining licenses for some mines. Affected by this incident, market concerns over the supply from the ore end led to a sharp increase in the futures price of alumina, with many contracts touching the daily limit up. However, the upward trend failed to continue, mainly because its impact on the current supply situation from the ore end was limited and could not cause a shortage of bauxite supply.
In reality, although some mines in Guinea have been shut down due to the government's cancellation of bauxite mining licenses, it does not affect the overall oversupply pattern of bauxite. According to foreign media reports, official data shows that despite regulatory rectification leading to production halts by major miners, Guinea's bauxite exports in the first quarter still soared by 39% year-on-year to a record 48.6 million tons. According to statistics from the Ministry of Mines of Guinea, the country dispatched 312 vessels / 48.6 million tons of bauxite in the first quarter and 225 vessels / 34.9 million tons of bauxite in the same period of 2024. It is worth noting that the export ban of the United Arab Emirates Global Aluminium (EGA) is still in effect. Bernabe Sanchez, an independent mineral economist, pointed out that the current weekly export volume of 3.7 million tons indicates that Guinea's bauxite export volume may reach 199 million tons in 2025 and 146 million tons in 2024.
From the perspective of the shipment to China, the import volume of bauxite in China from January to May this year has seen a significant year-on-year increase. According to the General Administration of Customs of China, in May 2025, China imported 17.514 million tons of bauxite, a decrease of 15.32% month-on-month and an increase of 29.43% year-on-year. From January to May 2025, China's cumulative imports of bauxite reached 85.2872 million tons, an increase of 25.84% year-on-year. Mysteel predicts that the supply of bauxite from Guinea to China this year will be 58.28 million tons, an increase of 30.6% year-on-year. Even though the rainy season in the second half of the year has an impact on bauxite mining and transportation, the operational efficiency of mines in Guinea has generally improved this year. Without external policy interference, it is expected that there will be no shortage of bauxite supply in the second half of the year, and the long-term contract prices in the third and fourth quarters are also unlikely to break through. It should be noted that Guinea is about to enter the rainy season, which may have a certain impact on the shipment volume and there may be a temporary shortage. However, after the rainy season in Australia, mines have resumed production. There is an expectation that the shipment volume of Australian mines and the import volume from China will increase in the future. Moreover, enterprises usually prepare inventories before this. If the supply risk at the mine end does not expand in the later period, It is expected that the operation of the alumina plant will be less affected by the supply issue of bauxite, and it is necessary to continuously monitor the sudden risk events in the supply at the Guinea ore end.
Costs have declined, but the industry's profitability is not optimistic
Since the beginning of this year, the price of bauxite has been continuously declining, leading to a continuous drop in the cost of alumina in the domestic alumina industry. However, the industry's profitability is not very optimistic. With the rapid decline in alumina prices in the first quarter, the situation of excessive profits in the industry has basically come to an end. According to Mysteel data, as of May 2025, the weighted average full cost of China's alumina industry was 2,879.8 yuan per ton, a decrease of approximately 153.6 yuan per ton compared to the previous month. The average profit of China's alumina industry was 187.20 yuan per ton, an increase of 306.6 yuan per ton compared with the previous month.
In conclusion, under the circumstances of an unchangeable oversupply situation, the price of alumina has been continuously declining and has returned to the cost-based pricing logic. In the first half of the year, the output of alumina rose, increasing supply pressure and causing a significant decline in the market. However, the price falling below the cost line led to large-scale losses for enterprises, and the number of maintenance and production cuts increased. Coupled with the disturbance at the Guinea mine end and the support from the low decline in warehouse receipts, the alumina market stabilized and rebounded slightly. In the second half of the year, the supply of alumina may still be in excess. Judging from the current supply situation at the ore end, there may not be any ore supply problems in the second half of the year. Moreover, unless there are new unexpected events, the supply of bauxite will not affect the start-up of alumina production capacity. Alumina enterprises continue to resume production and operation, with output expected to rise. It is predicted that the overall supply and demand situation of alumina will remain in excess in the second half of the year and next year. However, due to the current low corporate profits, the degree of overcapacity may narrow compared to the first quarter of this year. Under the pattern of oversupply and overdemand, alumina is expected to operate under pressure. However, it cannot be ruled out that there will be another concentrated production cut due to losses, which will lead to a phased price rebound. Attention should be paid to the supply situation of overseas bauxite, the profit trend of alumina enterprises, and changes in operating capacity.
