Recently, aluminum oxide futures prices have retraced from their highs, with the 2501 aluminum oxide contract having a maximum retracement of over 5% from the recent high of 5477. As of November 18 at 10:15 AM, the increase is 0.52%, with a quote of 5235 yuan/ton.

Aluminum oxide watching tool - market.

News:

According to an announcement from the Ministry of Finance and the State Administration of Taxation on November 15, 2024, the export tax rebates for aluminum products, copper products, and chemically modified animal, vegetable, or microbial oils and fats have been canceled. This announcement will take effect on December 1, 2024.

In this regard, china securities co.,ltd. futures analysis indicates that the fundamentals of alumina remain strong, but the export tax rebate policy is putting pressure on aluminum prices, leading to expanded losses in the aluminum industry, which is bearish for alumina, and distant contracts will weaken again. The downstream electrolytic aluminum supply side will face the pressure of aluminum product outflow due to improvements in dispatch from xinjiang, while the consumer side's export orders after December will be significantly impacted. It is possible that some small and medium-sized export enterprises will reduce production, and by the end of December, processing enterprises will face the impact of the Spring Festival holiday, leading to a gradual weakening of the fundamentals.

We can continuously monitor changes in news through the alumina tracking tool - major events feature (experience it now).

Aluminum oxide monitor - important

Fundamental analysis.

According to the research reports from dayue futures, the import of bauxite has significantly decreased due to overseas news disturbances. Coupled with the domestic alumina inventory being below the average range of the past five years and still in a destocking trend, it indicates insufficient incremental supply from alumina. The recent supply-demand pattern may be biased towards tightening.

Source: Wind, dayue futures.

Source: Wind, dayue futures.

According to Mysteel's research, as of November 14, the national alumina capacity utilization rate is 86.69%, an increase of 0.3 percentage points from last week. Recently, some alumina plants have completed their reduction and maintenance, and are now back to full production, involving a capacity of 1.3 million tons per year. However, due to eco-friendly constraints and insufficient ore supply, some alumina plants in the north have gradually reduced production, involving a capacity of about 0.4 million tons per year, and the scale of production cuts may further expand. It is expected that next week there is a risk of declining alumina capacity utilization rate, with stricter environmental inspections in some northern regions, which may force some alumina plants to reduce or restrict production. This indicates that there may be further expectations of reduced supply from alumina.

In terms of downstream electrolytic aluminum, according to Huatai futures, as the usd hits a new high for the year, futures aluminum has been under pressure and continuously dropping. Recently, due to factors such as eco-friendly regulations and costs, some electrolytic aluminum plants in henan and guangxi have experienced production cuts. The total scale of production cuts is expected to be around 0.05 million tons, and another electrolytic aluminum company in guangxi plans to undergo technical renovations at the end of the year, involving a capacity of around 0.1 million tons. Domestic aluminum downstream activity has slightly declined, while environmental controls in the north still exist, affecting some downstream enterprises' operations.

We can use the alumina monitoring tool - Platts alumina price (experience it immediately) to continuously monitor the changes in the offshore price of australian alumina and the ex-factory price of chinese alumina. Data shows that both prices are in an upward trend and have not yet shown signs of correction, indicating that the supply-demand pattern of alumina may be biased towards tightening.

Alumina monitoring tool - Platts alumina price.

Alumina monitoring tool - Platts alumina price.

Additionally, the alumina tracking tool - seasonal analysis of hold positions (click the link to experience) shows that the hold positions for the alumina 2501 contract are higher than the historical levels for the same period and are likely to continue rising, with the risk of extreme trends or sharp fluctuations if the hold positions remain high as the delivery month approaches.

Alumina tracking tool - seasonal analysis of hold positions.

Institutional perspective

Guohai Liangshi Futures: From a long-term perspective, both the mine end, supply side, and demand end indicate a tight alumina fundamental situation. Issues with the mines remain the main factor driving this round of market speculation, as reduced supply and increased demand provide upward support for alumina prices. We believe that there will be a correction in this round of market but not deep, and a relatively strong trend can at least be expected before the Spring Festival.

Zhonghui Futures: Alumina is showing a near-strong and far-weak pattern. The disruptions and increments in alumina shipments from overseas Guinea bauxite mines coexist, and recovery may occur after the rainy season impacts wane; domestically, winter has arrived in the north, and alumina supply is disrupted by production restrictions during the heating season and maintenance, while the tight supply from the mining end still limits the increase in alumina capacity. In terms of inventory, the recent alumina inventory at electrolytic aluminum plants has seen some recovery. In the short term, the current alumina supply-demand structure shows slight discrepancies, and attention should be paid to changes at the bauxite mine end.

Yida Futures: The situation of tight alumina supply persists, with overseas fill prices continuing to rise, the export window has opened, and there are many disruptions during the domestic heating season; alumina companies are enjoying high profits, but electrolytic aluminum companies have seen their profits turn negative, which may limit the upward space for alumina. For downstream, the domestic aluminum export tax rebate has been canceled, but overseas demand remains significant, requiring a widening price gap between domestic weakness and foreign strength to provide export profits; there may also be a rush for exports in the short term, but demand may be limited.