The SHFE alumina futures prices have shown a volatile trend recently. Although fundamentals have dragged spot prices weaker, as industry-wide losses widen, market expectations of production cuts keep rising. Therefore, after the basis narrowed back, futures prices found bottom support, and traders took a cautious wait-and-see stance.
On supply side, recent domestic alumina operating capacity was about 99.1 million tonnes per year. A large new alumina project in Guangxi started trial production on its first production line last Sunday, involving capacity of about 1 million tonne per year; after product quality stabilizes, it will advance the second 1-million-tonne line. A northern alumina refinery, under heavy loss pressure, has gradually halted front-end feeding and aluminum hydroxide production, but by relying on internal coordination it still maintains calcination capacity at present. In addition, affected by high raw-material costs such as bauxite, some alumina enterprises in the north and south may carry out phased production curtailments after meeting their annual output targets.
As of last Thursday September 17, 2026, China's domestic alumina capacity utilization rates averaged 82.27%, down 0.22 percentage points from the previous week. The earlier alumina futures rebound widened the basis, and arbitrage traders increased inquiries and willingness to take delivery. The alumina refineries actively sold to ease inventory and sales pressure, and some refineries' stocks were transferred to railway stations and delivery warehouses.
Last week, domestic alumina traders' inventories were 6.78 million tonnes, up 70,000 tonnes week-on-week. Ahead of the Mid-Autumn and National Day holidays, although downstream aluminum smelters currently hold ample raw-material inventories, there is still some short-term procurement and restocking intent; combined with earlier cross-region shipments arriving progressively, in-transit inventories shifted into smelters' raw-material inventories and port stocks.
According to Mysteel, last week domestic aluminum smelters consumed about 1.6775 million tonnes of alumina, a slight increase from the prior week. Domestic aluminum capacity remains around 45.42 million tonnes per year; northwest downstream smelters maintain tender purchasing and need-based replenishment, but overall demand growth lags supply growth, and the market mainly executes long-term contracts.
Under multiple pressures, operating losses at some enterprises and intense competition among coastal capacity, alumina refineries across regions remain torn between proactive cutbacks and maintaining output, with operating capacity still at a cyclical high. Subjectively, downstream smelters' raw-material inventories are ample; in a buyer's market, suppliers have strong crisis awareness and still actively maintain long-contract supply security.
Also, because some refineries have a high share of long-term contracts, they have remained cautious about reducing output, while refineries with larger spot sales exposure and certain cost advantages, if their own profitability is manageable, prefer full-capacity operation to lower costs and raise efficiency. In the short term, the supply-surplus trend shows no sign of improving; domestic alumina prices are expected to continue steady-to-soft, with a running range of Yuan 2,550-2,680/tonne.
Written by Regina WANG
wangjiaqie@mysteel.com
