Everbright Futures 0317 Hot Spot Tracking: Supply Expectations Disrupted, Has Aluminum Oxide Launched a New Round of Market Movement?

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Affected by Guinea’s plan to tighten bauxite production and exports, the market fears changes in the global bauxite and alumina trade patterns. The main domestic alumina futures surged over 3% during trading, reaching above 3,000 points. Due to oversupply of global alumina and increased Guinea bauxite supply, Guinea bauxite prices quickly fell, also dragging down global alumina prices. Additionally, Middle East conflicts have altered alumina trade flows, with alumina originally shipped to the Middle East being resold at lower prices to other regions. The low prices put pressure on Guinea’s sales revenue and tax income, so it’s not surprising that Guinea is tightening bauxite supply. Future focus should be on the specific details and implementation timeline of production control policies.

From the domestic fundamentals, alumina supply and demand remain loose. As of March 16, spot alumina prices rose to 2,697 yuan/ton. Domestic alumina producers are maintaining production cuts to cope with profit pressures, while overseas alumina raw materials shipped to the Middle East are being sold at lower prices elsewhere due to Strait blockages. The narrowing of domestic and international price differences has restored import margins. Rising freight costs support alumina prices, but the acceleration of warehouse receipt registration and inventory accumulation may shift alumina from strength to weakness. Guinea’s plan to reduce bauxite production and exports, along with expected overseas supply contraction, provides short-term support for alumina prices, but sustainability remains to be seen.

Written by: Li Qi

Professional Qualification: F3046227

Trading Consultation Qualification: Z0016145

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