Overview of China’s Fused Alumina Market (January–February 2025)

Market Summary:

In January, white fused alumina (WFA) prices declined significantly. The cost of alumina dropped sharply this month, reducing WFA production costs. As the Spring Festival approached, WFA producers completed pre-holiday orders and began halting production. Downstream customers also started to shut down operations for the holiday, leading to a quiet market. Although WFA production costs fell, the price decrease was relatively limited, resulting in improved theoretical profit margins.

In February, WFA prices continued to decline. Alumina prices first dropped and then rebounded during the month, causing a shift in market sentiment. Early in the month, falling alumina prices led downstream enterprises to purchase only based on immediate needs. As alumina prices rose later, purchasing willingness increased slightly after a short observation period, and WFA demand saw a slight recovery.

Supply Side:

In January, WFA supply remained at a low level. Producers gradually completed orders and shut down for the holiday. Due to the substantial drop in alumina prices, production willingness declined. Even some companies that usually continued production during the holiday chose to suspend operations and wait for more stable post-holiday alumina prices before resuming.

In February, WFA supply remained low. While normal production gradually resumed, declining costs discouraged stockpiling. Most enterprises maintained an order-based production model, keeping overall supply at a relatively low level. As demand began to recover slightly, WFA supply also began to increase slowly.

Demand Side:

In January, WFA demand was relatively weak. As the Spring Festival approached, downstream enterprises successively ceased operations, reducing demand. Additionally, with a strong expectation of price declines, downstream customers pressured prices and reduced purchasing volume.

In February, demand remained weak. WFA prices continued fluctuating. In the early part of the month, the persistent decline in alumina prices led to cautious, just-in-time procurement. It wasn't until later, when alumina prices slightly rebounded, that WFA demand began to recover marginally.

Cost Side:

WFA production costs decreased in both January and February. According to Baiinfo:

January alumina monthly settlement prices:

Henan: RMB 4,986/ton (down RMB 756/ton from December)

Shandong: RMB 5,085/ton (down RMB 633/ton from December)

February alumina monthly average settlement prices:

Henan: RMB 3,477/ton (down RMB 1,509/ton from January)

Shandong: RMB 3,424/ton (down RMB 1,661/ton from January)

Profitability:

In January, WFA profits decreased initially. Although costs dropped significantly and prices declined only slightly, the widespread production shutdown reduced further price adjustments, which ultimately led to increased theoretical profit margins.

In February, WFA profits increased slightly. With a sharp drop in costs and only a minor drop in prices, the limited price adjustment combined with lower costs resulted in improved theoretical profits.

Inventory:

In January, WFA inventory declined. Producers continued to de-stock, and with both supply and demand sides entering a holiday pause, further inventory changes became limited.

In February, WFA inventory increased slightly. Most producers maintained order-based production while downstream customers focused on just-in-time purchases. Overall, inventory levels saw a modest rise.