Today, the aluminum oxide futures price has retraced, with a 2.09% decline in the aluminum oxide 2501 contract as of 14:00 on October 30th, quoting 4873 yuan/ton at midday.

Fundamental analysis.

On the supply side, data released by the International Aluminum Institute (IAI) shows that the global aluminum oxide production in September was 12.03 million tons, with a daily average production of 0.401 million tons. The revised global aluminum oxide production for August was 12.562 million tons. China's estimated aluminum oxide production for September is 7.21 million tons, revised down to 7.45 million tons for August. On the demand side, according to SMM statistics, as of October 28, 2024, domestic electrolytic aluminum ingot social inventory is 0.625 million tons, with domestic available electrolytic aluminum inventory at 0.499 million tons. The inventory continues to decrease by 0.005 million tons compared to last Thursday, showing a decrease of 0.033 million tons from the end of September. Recent supply and demand data indicate that the supply and demand pattern for aluminum oxide remains relatively tight.

Guosen Futures stated that under the stimulus of macro policies, China's aluminum oxide supply and demand fundamentals are relatively tight, coupled with low spot inventory and a surge in export demand, multiple factors resonate and trigger an overall price increase in the aluminum oxide futures market in the short to medium term. Additionally, supply disruptions in Guinea, a major source of imported bauxite and aluminum oxide in October, have strongly driven aluminum oxide prices. However, in fact, China's aluminum oxide supply and demand fundamentals are still relatively balanced. In the medium to long term, aluminum oxide may transition to a slightly oversupplied state, while the short-term supply gap for aluminum oxide is limited and does not support a sustained rapid rise in aluminum oxide prices. Market participants in the aluminum oxide futures industry should be prepared for material price hedging and risk control to deal with price fluctuation risks.

Furthermore, according to the Securities Times, reporters learned recently that compared to May this year, aluminum companies' profit per ton has been reduced by over a thousand yuan, with some companies even entering a loss range. The high running aluminum oxide prices have impacted downstream industries, with negative feedback effects in the industry chain becoming increasingly apparent. This indicates that the continuous high prices of aluminum oxide have exerted certain pressure on the downstream electrolytic aluminum industry.

According to Zhuochuang News, the price of alumina, the raw material, has been rising continuously due to supply issues of bauxite, with the production cost of electrolytic aluminum exceeding 19,500 yuan per ton. The cost increase has driven up the price of aluminum, while its profit margin is also under pressure. Currently still in the traditional peak consumption season, downstream end demand is generally stable, with relatively stable demand for electrolytic aluminum. However, the continued high price demand is showing a negative feedback, and many processing plants are mainly maintaining just-in-time purchases.

In the future, it is necessary to continuously monitor the changes in the supply side news and supply and demand data of alumina. We can monitor this through the alumina monitoring artifact - significant events function (click the link to experience).

Funds in the market

The capital trends in today's market may have a certain impact on the correction of alumina futures prices. Through the alumina monitoring artifact - capital bomb (experience immediately), we found that in the morning of October 30th, from 11:00 to 11:08, the alumina 2501 contract triggered several main selling higher proportion capital bombs. After the capital bombs were triggered, the price continued to decline continuously, with a relatively large short-term decline. Therefore, whenever there is a capital bomb triggered, we can open the market monitoring tool to observe the changes in long and short positions in the market with large fluctuations.

Institutional perspective

Minmetals Futures: On the raw material side, there is still no large-scale resumption of production in China, with continuous disturbances in imported ore supply. Short-term ore supply is difficult to increase significantly, but long-term ore supply expectations are widening; on the supply side, due to environmental protection pressures, northern alumina plants in the heating season are forced to reduce production, maintenance disturbances continue. Despite the high profits stimulating alumina plants to actively resume production, the short-term supply increase is limited, and the long-term supply is expected to loosen significantly. Turning points need to be tracked in terms of production progress. On the demand side, the power restrictions on aluminum smelters in Yunnan have been lifted, subsequent aluminum smelter startups remain stable and growing, providing strong support for alumina demand. In terms of imports and exports, overseas prices are further rising, export opportunities are opening up, and domestic alumina export expectations are expected to increase significantly. From a strategic perspective, the current alumina fundamentals continue to deteriorate and are difficult to resolve in the short term. Alumina spot prices are more likely to rise than fall, and near-month contracts are expected to remain strong. However, the long-term pressure on alumina production still exists, and the turning point in inventory accumulation may be seen in the first quarter of next year. The current alumina market is intensely contested between bulls and bears, with sharp price fluctuations in the short term. It is advisable to manage risks well and participate cautiously.

Uni-De Futures: The tight supply situation persists, with raw material inventories at aluminum smelters continuing to decline. Spot market transaction prices continue to rise, with overseas alumina transaction prices reaching $730 per ton. There are signs of a slight reduction in overseas aluminum production. Although there are many uncertainties in Guinea and freight rates are rising, the impact on Guinea's port exports has yet to be observed. Profits of aluminum smelting companies are being squeezed, while profits of alumina companies are expanding. The short-term strength of alumina will continue, but caution is advised when participating in the late-stage market.

Everbright Futures: Luoyang in Henan issued an orange alert for heavy pollution weather, alumina companies continue to limit production, and the supply disruption logic continues to push up alumina prices. As the peak season wanes, downstream demand for electrolytic aluminum shows signs of decline. Supply remains high but stable, and the pace of inventory clearance is slowing down. Under downward pressure on fundamentals, but with the strong momentum of alumina and support for arbitrage opportunities between varieties, the likelihood of a sharp decline is relatively low, or it may maintain a high-level fluctuation.