1.Market Overview
In 2024,the average price of domestic alumina in China was 4,074 CNY/ton,up 1,162 CNY/ton from 2,912 CNY/ton in 2023,reflecting an increase of approximately 39.93%.The price of alumina in China displayed a stepped upward trend in 2024,with a significant overall price increase.The peak price of domestic alumina in 2024 reached 5,765 CNY/ton,rising 2,631 CNY/ton from the 3,134 CNY/ton at the beginning of the year,marking a year-on-year increase of 93.13%.The lowest price was at 3,134 CNY/ton at the beginning of the year,up 8.03%compared to the same period last year.
The alumina market in 2024 was influenced by multiple favorable factors.Although the price experienced a downward trend during certain periods,the decline was relatively limited.From a fundamental perspective,factors such as limited production capacity and increasing downstream demand provided certain support for alumina spot prices.Additionally,overseas alumina had no significant price advantage over domestic alumina in China,and the market shifted from a net importer to a net exporter in 2024.Furthermore,the linkage between alumina futures and the spot market gradually strengthened since the listing of futures contracts,with futures prices repeatedly breaking new highs,which attracted market attention and further increased the activity of the alumina market.These combined factors helped drive alumina spot prices upward.
From a market fundamentals perspective,as prices rose,the profit levels in the alumina market increased significantly.This encouraged enterprises to be more active in production,and alumina market operating rates gradually rose.However,some enterprises were limited by tight bauxite supply and equipment maintenance issues.Additionally,the release of heavy pollution weather warnings in some northern regions during the fourth quarter caused production adjustments,which led to an unfavorable supply-side performance in the alumina market.On the other hand,in Yunnan,downstream electrolytic aluminum enterprises gradually resumed production starting in late March due to the lifting of power rationing policies,which boosted alumina market demand.Overall,the alumina market in 2024 generally saw a situation of both supply and demand increasing.
Regarding pricing,the significant price increase in China’s alumina market in 2024 mainly occurred in two phases.The first phase was from late April to May,during which multiple favorable factors acted together:(1)Mining activities in Shanxi and Henan were restricted,and some alumina enterprises faced difficulties in resuming or increasing production due to tight bauxite supply;(2)Increased production capacity in the downstream electrolytic aluminum industry boosted alumina market demand;(3)Alumina futures contracts surged,and some alumina spot transactions were delivered to warehouses,further tightening market supply.These factors combined to create an active market atmosphere,with continued spot transactions driving prices upward.The second phase occurred from October to November,when some alumina enterprises faced production restrictions due to environmental policies in the fourth quarter.This further strengthened the positive effects of supply constraints on alumina prices.Although prices showed a downward trend in mid-to-late December,the overall decline was limited.
2.Imported Alumina Market
In the imported alumina market,the price of imported alumina showed an overall upward trend in 2024,with a decline from the peak in early December.The peak FOB price for Australian alumina in 2024 reached$805 per ton,up$455 from$350 per ton at the beginning of the year,marking a 130%increase.In early December,the FOB price for Australian alumina fell from the peak to$680 per ton and then fluctuated slightly around this price.
According to Baichuan Yingfu,the overseas alumina price trend was relatively stable in Q1 2024.During this period,the rise in domestic alumina prices in China somewhat influenced the price trend of overseas alumina.However,in 2024,certain overseas production capacities were restricted,resulting in a tighter supply of overseas alumina,which pushed prices significantly higher.For example,a certain alumina plant in Western Australia began reducing production in Q2 2024 due to a shortage of bauxite supply,eventually halting all production by the end of June.This plant had a built capacity of around 2.2 million tons.Additionally,some alumina plants in Australia faced reduced operating rates of 60%-70%due to natural gas supply shortages.One plant had a built capacity of 3.4 million tons,and another had a built capacity of 4.1 million tons,which affected their alumina output.Furthermore,an alumina plant in India with a built capacity of 2.3 million tons faced restrictions in alumina calcination,resulting in a tightening of alumina supply during that period.Another alumina plant in India experienced production limitations due to issues such as bauxite supply and red mud pond leaks.
By December,the supply of overseas alumina began to recover,and prices started to fall.In March 2024,a natural gas pipeline rupture occurred in Queensland,Australia,leading to a gas supply shortage that impacted the production of some alumina plants.A certain group announced a force majeure on alumina exports on May 21.By the end of November,they announced that the gas supply could meet approximately 95%of the demand,and the force majeure restriction on alumina exports was lifted.Moreover,restrictions on downstream aluminum plant production led to an increase in the available spot supply of overseas alumina compared to the earlier period.The combination of increased supply and reduced demand caused overseas alumina prices to decline.
In summary,the restricted production capacity led to a tighter supply of overseas alumina,resulting in strong price trends for overseas alumina.Compared to domestic Chinese alumina prices,overseas alumina prices were generally higher.As the price gap gradually widened,the price advantage of overseas alumina diminished,leading to a reduction in China’s net imports of alumina in the first half of 2024.As a result,the Chinese alumina market shifted from being a net importer to a net exporter in 2024.
3.Market Forecast
1）Supply Side:According to the current plans,there is a clear expectation of increased alumina production capacity in the Chinese market in 2025.If these new capacity projects proceed smoothly,production will be released in 2025,and the current tight supply situation in the alumina market will gradually ease.The expected increase in alumina capacity is more noticeable in regions like Guangxi and Hebei.Additionally,there is also an expected increase in alumina capacity in northern Shandong.However,based on past experience with the implementation of new alumina projects,there are many uncertainties during the planning process,and the specific progress of these projects will continue to be monitored.While some enterprises may reduce production temporarily due to insufficient raw materials,high costs,or equipment maintenance,overall,alumina supply in China is expected to be relatively sufficient in 2025.A point of concern is that the issue of bauxite supply has become increasingly prominent in recent years,and the actual bauxite supply situation for alumina production needs to be closely observed.
2）Demand Side:In the downstream electrolytic aluminum market,it is expected that there will be some reductions in production,resumption of production,and new capacity in 2025.
Production Reduction:Regions such as Henan,Qinghai,Shandong,and Xinjiang have production reduction plans.The reductions in Henan,Shandong,and Xinjiang are mainly due to capacity replacement,while the reduction in Qinghai is mainly due to the commissioning of capacity upgrades.
Resumption of Production:Regions such as Guangxi,Guizhou,Hubei,Shanxi,Sichuan,and Xinjiang have resumption plans.Some enterprises in Guangxi,Sichuan,Hubei,Shanxi,and Xinjiang will resume production of capacities that were reduced in 2024 due to cost pressures.In Guizhou,some enterprises will resume production of capacity upgrades.
New Capacity:New production capacity is planned in regions such as Inner Mongolia,Qinghai,Xinjiang,Yunnan,and Guizhou.
Some electrolytic aluminum enterprises in Inner Mongolia plan to release new production capacity,but it is expected that the new capacity will be completed by the end of 2025,with production mainly starting in 2026.Other enterprises in Inner Mongolia,Xinjiang,and Yunnan will bring new production online due to capacity replacement,which will have a limited impact on the overall industry’s operating rate.In Qinghai,apart from some replacement capacity,there will be a net increase of 100,000 tons in capacity.Guizhou will bring online capacity that was scheduled to start in 2024 but had not been fully commissioned by then.
Overall,by the end of 2025,it is expected that the operating capacity of China's electrolytic aluminum industry will reach 44.17 million tons,with a primary aluminum output of 43.8 million tons.This would represent an increase of 700,000 tons compared to 2024,an increase of 1.62%,with the growth rate narrowing compared to 2024.
3)Cost Aspect:It is expected that in 2025,the supply situation of domestic bauxite will likely remain tight.Even with the expectation of some resumption of mining,the overall supply shortage will be difficult to reverse.As for imported bauxite,the demand from domestic alumina producers for imported bauxite will remain strong,and prices are expected to remain relatively firm in 2025.
Regarding liquid caustic soda,it is expected that both supply and demand will show growth in 2025.Although alumina production capacity is expected to increase,the demand for liquid caustic soda will also show incremental growth,but the increase is expected to be limited.In the non-aluminum downstream sector,due to the overall poor economic environment,purchases will mainly be based on essential needs,and intermediaries will also show caution in entering the market.As a result,the liquid caustic soda market is expected to see a relatively weak consolidation.
For thermal coal,both supply and demand in 2025 are expected to have limited changes,with prices fluctuating within a narrow range.As the economy is slowly recovering,there will be little impact on coal prices.It is expected that thermal coal prices will remain within a similar range as the latter half of 2024.
Overall,in 2025,the alumina industry’s cost will likely experience limited fluctuations,but is expected to remain at a relatively high level.
4)Import and Export:In 2024,China’s alumina market shifted from net imports to net exports.With the progress of new alumina capacity projects in China in 2025,the domestic market will become more adequately supplied in terms of capacity.As some overseas alumina production capacity shuts down or faces instability,the demand for alumina in the overseas market will remain strong.Therefore,it is expected that China’s alumina market will maintain a net export position in 2025,with net export volumes around 1 million tons.
5)Futures Market:Since the launch of the alumina futures market in 2023,more possibilities have emerged for the alumina market,and in 2024,the linkage between the alumina futures and spot markets gradually strengthened.From the price trend of the futures and spot markets,when alumina futures prices are significantly higher than spot prices,it boosts market confidence and encourages active trading.Some industry players are buying alumina on the futures market and delivering it to delivery warehouses.On one hand,these transactions are priced higher than traditional spot trades,and on the other hand,they consume the market’s available spot supply,benefiting the alumina market.However,when futures prices are lower than spot prices,alumina from delivery warehouses may flow out and eventually reach downstream electrolytic aluminum producers,which could have a negative impact on the alumina market.
It is expected that in 2025,the linkage between the alumina futures and spot markets will further strengthen,and factors such as physical delivery and electrolytic aluminum price linkage will influence alumina market fluctuations.
Summary:In 2024,with the continuous impact of favorable factors,China’s alumina spot prices reached a new high in recent years.In 2025,alumina prices will start at a high point.However,looking ahead to 2025,due to the more adequate supply of alumina production capacity and the clear expectations for new capacity projects,if these projects proceed smoothly,the tight supply situation in the alumina market will ease,and market price support will weaken.However,issues such as bauxite supply and equipment maintenance will still limit some production capacity,and there remains uncertainty in the supply-demand matching at certain stages.With alumina prices at high levels,downstream enterprises will face significant cost pressures,leading to some downward price pressure in alumina procurement.Once alumina prices enter a downward trend,the focus will shift to cost support.It is expected that alumina prices in 2025 will show a high-to-low trend,with the yearly price range expected to be between 3,200 and 5,200 yuan/ton,and the average annual price at around 3,700 yuan/ton.