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Metals & Mining Theme, Non-Ferrous
April 17, 2025
By Zuyu Tian and Jenson Ong
HIGHLIGHTS
Market eyes ramp-up of new Asian refinery capacity
Aluminum smelters monitor tariff developments
China awaits lower bauxite prices
This report is part of the S&P Global Commodity Insights' Metals Trade Review series, where we dig through datasets and digest some of the key trends in iron ore, metallurgical coal, copper, alumina, cobalt, lithium, nickel and steel and scrap. We also explore what the next few months could bring, from supply and demand shifts to new arbitrages, and to quality spread fluctuations.
A global alumina meltdown will likely lose some of its intensity in the second quarter, with new capacity additions already built into the prices following the Q1 slump, even as uncertainty fueled by the Trump administration's tariff agenda has sparked fears of a demand slowdown.
"We believe that the downside from present price levels for alumina will be limited, with the potential for a rebound if it emerges that new capacity coming online in Asia is subject to anything more than minor delays," said Karen Norton, principal aluminum analyst at S&P Global Commodity Insights.
Platts, part of Commodity Insights, assessed benchmark Australian alumina at $347.50/mt FOB on April 16, down nearly 50% from the start of January, while the FOB Brazil Atlantic Differential (AD) stood at a $20/mt premium, rangebound to $20/mt through Q1.
The Chinese domestic alumina price was assessed at Yuan 2,850/mt ex-works Shanxi on April 16, down nearly 50% from the start of the year.
Alumina prices plunged in Q1 due to an anticipated increase in Asian spot supply as the market eyed new refinery capacities ramping up in Indonesia. These projects include the Inalum-Antam JV Mempawah refinery, Hangzhou Jinjiang's PT Borneo Alumindo Prima refinery and Shandong Nanshan's Bintan Alumina Indonesia third phase expansion.
The 1 million mt/year Mempawah refinery in West Kalimantan started in late September 2024.
Mempawah is operated by PT Borneo Alumina Indonesia (BAI), which is jointly owned by PT Indonesia Asahan Aluminium (Inalum) with a 60% stake and PT Antam 40%.
Company sources told Platts that the plant's alumina output is expected to be commissioned in two phases of 500,000 mt/year each as the refinery ramps up to full capacity over the first half of 2025. The trial production period is expected to last about six months.
Inalum will continue to procure alumina externally in the near term as operations and output stabilize at Mempawah. Still, sources said it could become a net alumina seller at some point when the refinery is operating at full capacity, assuming Inalum's smelting capacity remains unchanged.
Jinjiang's 1 million mt/year refinery in Borneo, Indonesia, is currently slated to begin commercial production in Q2-Q3, with trial output expected to run for the first 3-4 months.
A company source with Jinjiang Indonesia said that small volumes of test output are currently stored in a domestic warehouse and that Jinjiang Indonesia is in the process of applying for an export license. Whether the alumina produced will be delivered to China or exported to other markets would depend on market conditions.
Shandong Nanshan's Bintan third phase expansion could commission its phase 3 expansion of 1 million mt/year in mid-2025, increasing capacity to 3 million mt/year, a company source said.
The commissioning of the Bintan plant, initially scheduled for the end of April, has been postponed due to rainy weather in Indonesia and equipment-related issues. The new timeline projects commissioning in the second half of the year, around July or August. Furthermore, the phase 4 expansion is anticipated to commence in November or December this year, said the source.
Aluminum smelters, meanwhile, are monitoring the decline in London Metal Exchange prices and diverging regional aluminum premiums on the back of new global tariffs.
US President Donald Trump announced a 10% baseline tariff rate on all imports effective April 5 along with country-specific levies slated to take effect April 9. In the days that followed until the time of writing (April 11), there have been retaliations, escalations and negotiations, culminating in a full-blown trade conflict with China and a 90-day respite from the reciprocal tariffs for everyone else.
Sources generally see potential bearish pressure on overall aluminum demand from building and construction, automotive and packaging sectors, slowing ramp-up in new primary aluminum capacity.
"Fundamentally, the outlook for the aluminum market has not changed significantly, with a very modest surplus still forecast for 2025 preceding a move to a deficit in 2026. However, the impact of US tariffs is casting a potential shadow, and some market participants are concerned that there could be a mild US recession," according to a report by Commodity Insights.
Platts assessed the CIF main Japanese ports spot premium for 99.7% P1020/1020A aluminum ingot at $150/mt plus London Metal Exchange cash April 16, down from $205/mt at the start of the year.
Platts assessed the spot 99.7% P1020 US Aluminum Transaction Premium at 38.80 cents/lb plus LME cash, delivered Midwest, on April 10, surging from 23.35 cents/lb at the start of the year.
China's alumina refining capacity is expected to rise by 11.2 million mt/year in 2025 on the back of continued expansion, bringing the country's total alumina capacity to 110 million mt/year, according to China Nonferrous Metals News.
China's bauxite imports surged to 30.6 million mt in January and February, up 25.6% year over year, according to customs data. Guinea maintained its position as the largest supplier, accounting for 76.4% of the country's total imports, up 28.7% from a year ago.
The second-quarter term contracts for Guinean bauxite with standard grade were heard negotiated in the range of mid-$80/dmt to mid-$90/dmt on a CIF China basis, while spot prices saw a gradual decline to the mid-$80/dmt CIF China level as Chinese alumina prices fell steadily during the first quarter.
Expectations for further declines in bauxite prices remain strong. Production costs for certain refineries, particularly those inland in provinces such as Shanxi and Henan, have exceeded the prevailing alumina prices due to higher transportation costs than those near the ports. However, sources said a potential slowdown in alumina refinery operations could limit the downside potential for bauxite prices.
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