Alumina prices reached record highs in late 2024 as supply disruptions in several major supplying regions and strong demand in China sent buyers scrambling for units. While new projects set to come on line next year could help a return to balance and a subsequent fall in prices, alumina markets remain more susceptible to supply shocks now than in years past, and the availability of the intermediate raw material needs to be closely monitored in 2025.
Alumina prices surged by more than 70pc in 2024, and prices in both China and Australia reached record highs above $780/t in November after a series of production stoppages and supply route disruptions which affected most major supplying regions.
In Australia, alumina exports fell this year as environmental regulations hit suppliers, while production was affected by lower natural gas supply from March following a fire-related disruption in Queensland. Anglo-Australian miner Rio Tinto declared force majeure on third-party contracts from its Queensland alumina operations in May due to the gas shortage.
In Brazil, US aluminium producer Alcoa also declared force majeure on bauxite shipments out of Juruti Port in early November, when the nearby Santarem harbour master declared the waterway inoperable after the terminal access channel was blocked. Santarem accounted for 99.7pc of Brazilian bauxite exports of 4.5mn t so far this year, according to customs data.
And in Guinea, bauxite shipments from a subsidiary of UAE-based Emirates Global Aluminium (EGA) were suspended by customs in October, leading to further supply concerns, even though EGA said the suspension would not immediately affect operations at its Al Taweelah alumina refinery. This followed an overall reduction in monthly bauxite shipments of almost 40pc in September due to the country's rainy season disrupting operations.
Aluminium production has continued rising to new highs this year. Chinese output reached record levels after new capacity came on line in Inner Mongolia in the second quarter, while output in Yunnan province has been unaffected by power restrictions like last year, with adequate rainfall in 2024 to feed the province's hydropower generators.
But China's alumina capacity growth has not kept pace with the rise in primary metal output, so alumina imports into China have increased. In the first nine months of the year, alumina imports into China grew to more than 123mn t, up by a third from the same period in 2023.
The subsequent tightness in global alumina supply has begun to hit aluminium production rates. Russian aluminium producer Rusal announced in November it is curtailing production because of high alumina prices. Rusal is one of the world's largest producers of alumina, but still requires third-party material for more than a third of its requirements.
Alumina tightness is expected to ease over the next two years. China has more than 13mn t of new capacity slated for 2025, while high prices will incentivise increased use of its current 103mn t/yr capacity, from around 84pc at present. In India, Vedanta Resources is planning a new 6mn t/yr alumina refinery to come on line by 2026, and in Guinea EGA is planning its own 2mn t/yr refinery also by 2026.
Swiss bank UBS expects a 960,000t alumina surplus in China next year, from a deficit of 235,000t this year. Globally it expects a surplus of 890,000t, from a 920,000t deficit this year.
But tight bauxite supply is a constraint in China, with environmental regulations restricting bauxite output in Shanxi and Henan provinces since 2022. At least 70pc of Chinese alumina production will remain dependent on imported bauxite next year.
And bauxite output in Guinea, source of 72pc of Chinese imports from January-September this year, will continue to face obstacles from seasonal rains, labour disputes and underdeveloped infrastructure. With global alumina supply now more dependent on fewer sources than in the past, the potential for supply shocks in 2025 cannot be dismissed, and alumina supply could remain a big factor for aluminium prices in 2025.
