US ALUMINUM SERIES: Analysts anticipate bauxite, alumina supply recovery after a volatile 2024

This report is part of a series on impactful trends in the US aluminum market based on S&P Global Commodity Insights pricing, news, and analytics.

Supply-side challenges for bauxite and alumina should gradually ease in 2025, analysts told S&P Global Commodity Insights.

Supplies of alumina and bauxite, both raw materials for aluminum, had been in tight in 2024, increasing costs for aluminum producers who are otherwise enjoying rising demand for their product.

New refining capacity in Asia could alleviate supply problems if it comes online on time, as could a promised production cut from Russian aluminum producer UC Rusal. Analysts said President-elect Donald Trump's promises of a trade war could create uncertainty in aluminum markets.

"The alumina market, in particular, ran a deep deficit last year at something in the order of 1.5 million mt to 2 million mt," said Duncan Hobbs, a research manager for Concord Resources, a metals and minerals trading firm. "There will be new refining capacity coming into the market in China, India, and Indonesia. If these can ramp up according to schedule, then the alumina market should find a better balance this year."

There were multiple unplanned outages at bauxite and alumina supply sources last year, resulting in significant market volatility. The 2024 Platts alumina FOB Australia price averaged $504/mt, soaring 46.4% from 2024. A flurry of supply disruptions in late 2024 drove prices in the fourth quarter to an average $702/mt and reaching a peak of $805/mt Dec. 5. Relief from some of these issues led prices to stabilize at around $670/mt by the end of the year, which was still more than double than where prices sat at the beginning of 2024.

"In 2024, we saw a number of disruptions to both alumina and bauxite in major producers such as Australia, Guinea, and Brazil. These included the closure of Alcoa's Kwinana alumina refinery in Australia and Guinea's decision to suspend bauxite shipments from Emirates Global Aluminium's operations in the country," said Karen Norton, Commodity Insights' principal analyst for aluminum.

Additional 2024 supply issues included Alcoa's force majeure on bauxite shipments from its Juruti mine in Brazil in November, and Rio Tinto's March suspension of alumina exports from its Queensland Alumina operations in Australia.

More supply ahead

Alcoa's force majeure remains in place as of Jan. 15, but Rio Tinto lifted its suspension of Queensland alumina exports Nov. 22.

"Some of those challenges have receded already; for example, the lifting of a force majeure late last year at Queensland Alumina, with production levels set to pick up from there. At the same time, new capacity is coming onstream in Asia that is expected to give alumina production a further boost as the year wears on. Further upstream, in bauxite, while EGA's shipments remain suspended, it seems likely that discussions are in progress to try and reach a resolution," said Norton.

Commodity Insights forecast alumina prices to average $497/mt in 2025, down 1.4% from 2024. Analysts expect alumina prices to decrease in 2025 as new supply sources come online in Asia.

"New capacities in Asia are anticipated to drive alumina prices down to an annual average of $497/mt," said Commodity Insights analyst April Soriano. "The Inalum-Antam smelter grade alumina refinery in Indonesia is expected to commence production in March 2025, with an annual capacity of 1 million mt."

Rusal said Nov. 25 it would reduce its aluminum output by 250,000 mt because of negative macroeconomic trends. "Rusal's decision to cut annual aluminum production by 250,000 mt represents 500,000 mt of alumina annually, which will have a significant effect on alumina demand," Soriano said.

Trump's promised trade war

A large unknown for the markets this year is how changes in trade policy, led by US tariffs, could influence pricing and trade dynamics. Historically, bauxite and alumina have been exempted from tariffs, but there is no guarantee the new Trump administration will follow this trend.

"All else [being] equal, the higher the tariff, the larger the price adjustment in the short term because these markets are very supply inelastic," Hobbs said. "If large producers of alumina supplying to the United States experience tariffs, then you'd expect trade diversions to occur, and potential price rises in the US market."

Platts assessed alumina FOB Australia at $633/mt Jan. 15, stable with Jan. 14, reflecting tradable levels heard.