Recently, the futures price of alumina has risen sharply due to a notice from the Department of Natural Resources of Shanxi Province regarding the adjustment of the registration authority for the transfer of some mineral types. However, as the news of the disturbance at the mining end in Shanxi failed to further escalate, the speculative sentiment in the market cooled down and the market began to fall continuously. On August 14th, the main contract of alumina futures closed down 2.47%.
It is learned that this move by Shanxi Province aims to strengthen the protection of strategic mineral resources such as bauxite and gallium. The registration authority for the transfer of four types of minerals, namely ceramic clay, refractory clay, kaolin and bauxite, has been centralized to the provincial Department of Natural Resources. At the same time, the management authority for matters such as the assessment of mining rights transfer income and the review and filing of mineral resource reserves has also been centralized. The mining rights of the above-mentioned four types of minerals need to be uniformly recognized by the Provincial Department of Natural Resources before being disposed of in accordance with laws and regulations. If it is confirmed to be bauxite, strict rectification and standardization will be carried out in accordance with the laws, regulations and relevant policies on mineral resources management.
In this regard, Hu Bin, an analyst of nonferrous metals at Fangzheng Mid-Term Futures, told the Futures Daily that in recent years, the supply of bauxite in China has shown a year-on-year decline. On the one hand, this is due to the reduction of mineral resources; on the other hand, it is because of the increasingly strict control over mines. Although the output of mines in Shanxi Province has declined after several rounds of rectification, many local alumina enterprises have increased their purchase of imported ores to ensure production.
Against this backdrop, even if domestic ore supply tights further in the future, alumina enterprises still have the ability to cope. Therefore, the actual impact of this news is relatively limited. The rise in the futures market was more driven by the fermentation of sentiment and the increase of other "anti-involution" related varieties at that time. After the sentiment subsided, the continuous decline of the market was also expected." Hu Bin analyzed.
On the supply side, Wang Heng, an analyst of nonferrous metals at Everbright Futures, introduced that with the recent conclusion of the general election in Guinea, the export policy of bauxite has been somewhat relaxed, and the supply of overseas ore is expected to increase. In addition, after the commissioning of the alumina project in Indonesia, there will also be an increase in imports.
Recently, the operating capacity of domestic alumina enterprises has continued to increase, but the output shows a regional pattern of more in the north and less in the south. Hu Bin said that the regional mismatch between supply and demand in the alumina market persists. According to Baichuan data, as of August 7th, China's built alumina production capacity was 114.8 million tons, and the operating capacity was 94.4 million tons, with an operating rate of 82.23%.
On the demand side, Wang Heng stated that the resumption of production at Southwest electrolytic aluminum plants during the wet season is gradually coming to an end. The pace of raw material stocking and inventory clearance has slowed down, and the market's purchasing willingness may weaken in the future. Coupled with the limited increase in demand for casting aluminum alloys, the premium space for spot alumina has narrowed. The inventories of alumina plants and ports rose simultaneously, showing the largest increase within the month, and there is continuous cumulative pressure in the future.
Fu Ying, an analyst of nonferrous metals at Zhejiang Commercial Futures, also said that recently, the raw material inventories of some aluminum plants have risen to historical highs, and enterprises' willingness to purchase has declined, with limited growth in demand. The inventory of alumina at all links is in a continuous accumulation state. The inventory of alumina in the Shanghai Futures Exchange's delivery warehouse has rapidly risen from less than 5,000 tons in the early stage to 40,000 tons recently. In the short term, the fundamental pressure on alumina is materializing, and its price performance is weak.
Looking ahead, Wang Heng believes that the number of registered warehouse receipts for alumina futures in August is gradually increasing, which is expected to alleviate the previous risk of crowded positions. Short sellers have been continuously pushing down the market based on weak expectations for the distant month, causing the Back structure to dilute the strength of the positive position. Among them, there are no shortage of speculative funds at play, which needs to be confirmed or disproved by real data. The fundamental support for alumina has weakened, and there is pressure for a pullback. However, factors such as the news of mining rights in Shanxi, the firmness of foreign ore prices, and the relative resistance of the spot price of alumina to decline have limited the downside space of alumina futures in the short term. For the short sellers to continue to exert pressure, more logical support is needed. As the traditional peak season of "Golden September" approaches, the sentiment of funds may turn cautious, and the pressure on the market may ease. It is expected that the decline of alumina futures in the near month will narrow, and the decline in the far month will bottom out. At the same time, it is necessary to be vigilant against the unexpected scale of alumina capacity purchase and storage under the background of "anti-internal competition", which may trigger an oversold rebound.
In the medium and long term, given the current output ratio, there is indeed a certain degree of excess pressure on alumina production capacity, although it is not severe. However, it will gradually shift the supply and demand structure from a tight balance to a loose one. Hu Bin concluded that, on the whole, he holds a bearish view on the future trend of alumina futures. Given that the futures market of alumina often fluctuates sharply, the operation idea of short selling at high prices is more suitable for the current market.
Fu Ying believes that the supply and demand fundamentals of alumina will remain in a state of excess, suppressing the upward space of futures prices. However, due to factors such as the restocking of electrolytic aluminum plants during the heating season, the far-month contract has some support near the full cost line in inland areas. In addition, due to factors such as the decline in shipment volume during the rainy season in Guinea and policy disturbances, bauxite at the raw material end may enter a passive inventory reduction stage in the second half of 2025. The fact that the price of bauxite is more likely to rise than fall will lead to an increase in the cost of alumina. It is expected that the futures price of alumina will maintain a range-bound fluctuation pattern, generally fluctuating around the cost line.
