SMM: Alumina Supply Growth Expected to Exceed Demand Growth, Domestic and International Alumina Prices Likely to Face Pressure Amid Surplus [SMM Aluminum Industry Conference]

On April 16, at the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo—Alumina and Aluminum Raw Materials Forum, hosted by SMM Information & Technology Co., Ltd., SMM Metal Trading Center, and Shandong Aisi Information Technology Co., Ltd., and co-organized by Zhongyifeng Jinyi (Suzhou) Technology Co., Ltd. and Lezhi Qianrun Investment Service Co., Ltd., Guo Mingxin, Senior Analyst of Bauxite at SMM, discussed the topic "2024 Price Review and 2025 Trend Outlook of the Global Alumina Market." **Overview of Alumina Price Trends, 2024-2025** From 2024 to 2025, alumina prices experienced a rare market trend, with prices surging sharply before plummeting rapidly. Due to declining alumina production in Australia and limited ore supply constraining China's alumina production, global alumina supply tightened, driving prices up. However, high prices stimulated increased production, resumption, and new capacity, leading to a significant surplus in alumina supply and a subsequent sharp price drop. **SMM Analysis:** In 2024, China's alumina prices rose from 3,154 yuan/mt to a peak of 5,769 yuan/mt, an increase of 83%. Similarly, FOB prices for alumina in Western Australia surged from $347/mt to $810/mt, up 133%. By the end of 2024, the spot alumina market shifted to a clear surplus, causing prices to plummet. As of April 15, China's alumina prices had fallen to 2,870 yuan/mt, a drop of over 50%, while Western Australia's alumina prices pulled back to $330/mt, down 59% from $810/mt. **Global Alumina Supply and Demand Overview** Although the global alumina market saw a surplus of 1.79 million mt in 2024, the varying supply-demand dynamics throughout the year created conditions for significant price fluctuations. From Q1 to Q3, global alumina supply remained tight, with smelter raw material inventories declining, pushing prices higher. High profits spurred production enthusiasm, leading to a rapid shift to a significant surplus in Q4, with a strong bearish market sentiment and a sharp price decline. **SMM Analysis:** On the demand side, China's aluminum operating capacity continued to rise in 2024, with annual production up 1.61 million mt YoY. Overseas, aluminum operating capacity saw mixed changes, but overall, it increased, with annual production up 400,000 mt YoY. On the supply side, China's alumina production increased by 3.88 million mt YoY, while overseas alumina production rose by only 9,900 mt YoY. Globally, alumina demand increased by approximately 3.87 million mt, and supply rose by 3.89 million mt, resulting in a slight expansion of the surplus by 20,000 mt. However, supply remained tight from Q1 to Q3. **China's Alumina Supply and Demand Overview** Starting in Q2 2024, imported alumina supply significantly decreased, leading to seven consecutive months of tight supply in China's monthly alumina balance. Declining alumina raw material inventories at aluminum smelters laid the foundation for a price surge. **SMM Analysis:** On the demand side, new aluminum capacity was added in regions like Inner Mongolia and Xinjiang in 2024. With better-than-expected power supply in the southwest during the dry season, power rationing and production cuts did not recur. As Q4 approached, some smelters had winter stocking demand for alumina, driving strong demand. On the supply side, domestic bauxite supply declined, resumption fell short of expectations, and temporary import bauxite supply was insufficient, limiting capacity utilization in Shanxi and Henan, where operations were significantly lower than in other provinces. As a result, alumina production growth was constrained, and the market struggled to shift to a surplus. **Import and Export Overview** In 2024, Australia's alumina production declined, shifting the overseas alumina market from a surplus to a tight balance, driving prices up and closing China's alumina import window. From Q2 2024, China maintained a net export position, with net exports of 370,000 mt for the year. **China's Alumina Price Surge Far Exceeds Costs, Expanding Profit Margins** From August to early December 2024, alumina prices surged by nearly 2,000 yuan, with year-end profits exceeding 2,500 yuan/mt. **High Profits and Eased Bauxite Constraints Drive China's Alumina Operating Capacity Surge** High profits increased alumina refineries' acceptance of high bauxite prices. Encouraged by high ore prices, import bauxite supply increased, gradually easing and eventually eliminating bauxite supply constraints. Meanwhile, substantial profits spurred production increases, resumption, expansion, and new projects. By the end of 2024 and early 2025, China's alumina operating capacity peaked at over 90 million mt/year, with March 2025 operating capacity up 8.93 million mt/year YoY. **Concentrated New Project Startups May Exacerbate China's Alumina Surplus** High alumina prices in 2024 also stimulated the startup of new projects. In 2025, China is expected to add 13.4 million mt of new capacity, potentially increasing alumina production by nearly 5%. **Demand Growth Lags Supply, Alumina Surplus Continues** In 2025, China's aluminum operating capacity is expected to rise further, but limited by compliance capacity ceilings, monthly operating capacity growth is projected to fluctuate around 2% YoY, below alumina supply growth. China's alumina market is expected to remain in surplus throughout 2025. However, with prices falling from a high of 5,769 yuan/mt to 2,870 yuan/mt, a cumulative drop of 2,899 yuan/mt (over 50%), large-scale alumina capacity entered a loss-making state. Under loss pressure, the alumina surplus is expected to narrow. **Loss Pressure to Drive Fluctuations in China's Alumina Operating Capacity Around Demand** In H1 2025, the alumina market is expected to be severely oversupplied, with widespread losses in operating capacity. As of April 14, except for alumina produced using domestic bauxite from Guizhou and Guangxi, which remained slightly profitable, the industry entered a comprehensive loss-making state. Under loss pressure, alumina operating capacity (especially high-cost capacity) is expected to face significant production cut expectations. In this context, alumina operating capacity is projected to fluctuate around aluminum production demand. According to SMM estimates, China's aluminum production is expected to reach 44.68 million mt in 2026, with alumina demand around 86 million mt. Considering some export demand, China's alumina surplus in 2026 is expected to remain within 1 million mt. **Cost Side: Optimistic Import Bauxite Supply Growth to Drive Ore Prices Down to Around $70/mt** In 2025, Guinea remains the core driver of bauxite supply growth. In Q1 2025, Guinea's bauxite shipments reached a three-year high, up 37% YoY. Considering the rainy season, full-year 2025 shipments are projected at 186 million wmt, up 40 million wmt from 2024, shifting China's bauxite market to a relatively loose supply. The bauxite surplus for 2025 is estimated at 12.38 million mt, with prices expected to fall to $70-75/mt. In 2026, production releases from existing projects and new startups are expected to further increase China's import bauxite supply, shifting the market to a surplus, with prices fluctuating around $70/mt. **Cost Side: Pessimistic Import Bauxite Supply Growth to Drive Tight Balance in 2025** Guinea accounts for nearly half of China's bauxite supply, but its shipments face significant uncertainties, such as the rainy season, strikes, and government policies. Under pessimistic expectations, Guinea's bauxite shipment growth is projected at 25 million wmt, with a full-year surplus of 5.4 million mt. Considering new project stocking demand, the bauxite market may remain in a tight balance in 2025, gradually shifting to a surplus in 2026. In this scenario, bauxite prices are expected to remain relatively firm, with Guinea's prices projected to drop to $75-80/mt in 2025 and further to around $70/mt in 2026. **Surplus Market to Drive Alumina Prices Around Cost Levels** In a surplus market, alumina is unlikely to achieve significant profits, with prices expected to fluctuate around cost levels. If Guinea's bauxite prices fall to $70-80/mt, the average alumina cost is projected at 2,990-3,136 yuan/mt. Supported by cost levels, alumina prices are expected to fluctuate between 2,600-3,400 yuan/mt from 2025 to 2026. During stable market periods with no significant supply-demand imbalance, prices are projected to oscillate between 2,900-3,300 yuan/mt. **Profit Stimulus Drives Overseas Alumina Operating Capacity Growth** Rising overseas alumina prices also stimulated production increases and new capacity startups. Although alumina production in Australia declined due to production cuts and shutdowns, significant production growth in regions like Indonesia drove overall overseas alumina operating capacity growth. **Supply Growth Outpaces Demand, Overseas Alumina Market Expected to Remain in Surplus** In 2025, overseas alumina is expected to add 4 million mt of new capacity, while aluminum capacity additions are projected at less than 1 million mt. In 2026, overseas alumina and aluminum production are expected to increase by 2.79 million mt and 1.08 million mt, respectively. With an alumina consumption ratio of 1.925, overseas alumina demand is projected to expand by 2.08 million mt, widening the surplus by 710,000 mt to 2.51 million mt. From 2025 to 2026, the overseas alumina market is expected to remain in surplus, with prices fluctuating between $250-400/mt, supported by cost levels. **Click to view the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo special report.**

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SMM: Alumina Supply Growth Expected to Exceed Demand Growth, Domestic and International Alumina Prices Likely to Face Pressure Amid Surplus [SMM Aluminum Industry Conference]

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