At the current stage, the characteristics of spot price discovery in trade transactions are becoming more evident. There is a lack of foundation for direct cooperation between enterprises at both ends. On one hand, aluminum plants are not in a hurry to procure, with only small amounts of essential procurement conducted through bidding, mainly to attract trade merchants' quotations and achieve low-price deals. On the other hand, alumina producers are facing increased losses. The current market trend, in essence, is due to the overcapacity structure and surplus production, which is inevitable under the circumstances. A medium- to long-term adjustment is bound to happen.

Due to the increase in the number of scheduled maintenance at alumina plants in both the northern and southern regions, there will be a slight reduction in market supply in the short term, which will provide some support to market sentiment as it approaches the bottom of its current phase. From an overall fundamental perspective, the expectation of a relatively loose market supply still exists. However, unless alumina producers implement large-scale production cuts, the market will continue to decline, albeit at a slower pace.

The overseas transaction prices continue to decline sharply, and export conditions are insufficient. There is a possibility of imports driven by large overseas traders' early shipments under asymmetric timing. The current market presents a mismatch between "strong supply reality" and "weak demand expectations." In the short term, the alumina price is expected to continue its trend of fluctuating decline. Regarding the possibility of production cuts, alumina plants with supporting capacity or those not under heavy export pressure are expected to reduce production relatively earlier. Medium and small-scale alumina enterprises will face a test of their willingness to cut production, and if large-scale production cuts occur, they will face the risk of losing customers.

Whether it is reducing the price of imported ore or lowering the price of caustic soda, neither can avoid the increase in operating capacity, nor can they prevent the continuous price decline. This is because, under the same conditions of utilizing imported ore, coastal new projects still have a significant cost advantage over inland capacity. Recently, the only way for inland alumina enterprises to survive is to maximize the supply ratio of domestic ore, especially the supply of self-mined ore—more mining, more reserves, and focusing on good mines. A rough estimate indicates that under the same conditions, increasing the supply of domestic ore with a standard grade by 20-30% would significantly narrow the cost gap with coastal capacity. Currently, the supply of inland domestic ore remains extremely tight, and some alumina enterprises have benefited from personalized advantages due to the increased mining volume of their own mines.

The market has a deviation in its expectations regarding alumina production cuts, and the actual scale of production cuts is currently not as large as anticipated, requiring more time for confirmation. A reduction in alumina production means ceding market share, while also facing the continued rise in costs. Although high-cost alumina companies have already started experiencing cash flow losses after the month changes, the specific decisions by alumina companies regarding medium- to long-term production cuts or suspensions have not yet been understood. The current market's volatile trend is mainly driven by the 10-20 day production losses and supply mismatches caused by maintenance-related production cuts. Inland small- to medium-sized alumina producers, constrained by low ore self-sufficiency rates and incomplete industrial chain support, have begun to experience passive production cuts, but these cuts are not yet on a scale that significantly alters production levels. Coastal large alumina companies, benefiting from stable long-term supply contracts for bauxite and the logistical cost advantages brought by their port location, still retain some marginal profit space. These companies continue to produce and expand capacity according to their scheduled timelines, with the supply pressure continuously being shifted to higher-cost production capacities.

Based on the spot tender transactions from a few aluminum plants in the northwest over the past weekend and early this week, the spot prices for aluminum delivered to Shanxi or Shandong, when converted from the prices of different aluminum plants won by traders, are around 3100 CNY/ton and 3050 CNY/ton, respectively. However, due to the unknown actual delivery locations of the traders' contracts, these prices are mostly theoretical conversion prices. These two prices reflect a slight divergence in market participants' expectations of the future trend, whether they are industry participants or financial players. Financial participants are more aligned with the current sales intentions of alumina companies, while industry traders continue to lead the spot market downward, focusing on fulfilling their contract volumes while aiming to reduce the cost of long-term purchases and mitigate the risk of future price declines.