Last Friday, the spot verification transaction prices in the three northern regions all pointed to the range of 4750-4800 yuan/ton, with the market's downward momentum accelerating. Market participants mostly indicated that only when prices drop "to the right level" or when the market starts to release information about production cuts, will the trading psychology of both buyers and sellers calm down slightly, and market-making activities will decrease. As for the "right level" of prices, traders generally believe it is related to the dynamic costs of high- and medium-level capacities in regions like Shanxi and Henan. Considering factors such as ore procurement prices, the proportion of loose ore procurement, and fluctuations in caustic soda prices, it is expected that the costs for different enterprises in Shanxi, Henan, and other regions will generally range between 3500-4200 yuan/ton in the recent period.

The shift in trading structure and trading rhythm has led to panic in the spot market. The so-called change in trading structure mainly refers to the fact that, at the end of the year and the beginning of the new year, most small and medium-sized alumina enterprises and traders, apart from a few large alumina enterprises, have not completed the signing of all their long-term contracts. These market participants have mostly completed their alumina long-term procurement but have not finished their long-term sales of alumina. During this period, the market showed a situation of fewer long-term contracts and more spot products, creating a mismatch in the market, which triggered a "stampede" in sales by traders and small and medium-sized alumina enterprises.

The spot market for alumina has experienced intense trading panic and "stampede" phenomena after multiple rounds of bidding by aluminum smelting companies and demand-driven procurement, with prices being actively disclosed. On one hand, traders face high settlement costs for long-term purchase contracts with alumina producers, while on the other hand, traders are seeing a price drop of around 400 RMB/ton from aluminum smelting companies offering "fixed price" procurement. After assessing market trends and potential risk losses, traders tend to accept small-scale transactions, which has led to a rapid decline in quotes. Currently, the spot alumina price in northern regions has started to approach around 5,000 RMB/ton.

The spot market in Xinjiang led the decline in prices, with factory prices in various regions following suit, but with different degrees of decline. The market, especially in Xinjiang, has limited available spot supply, yet the continuous conversion of around a thousand tons of various spot goods helps maintain price discovery. The local transaction price tends to hover around 5,200 RMB/ton, creating a significant price gap compared to the factory gate prices.

The spot and futures prices of alumina have continued to decline, leading to a lack of confidence among some traders. As a result, traders are eager to sell, while electrolytic aluminum companies are buying in response. The current spot market circulation reflects transactions between traders and electrolytic aluminum companies. The demand side is generally maintaining a mindset of buying in small quantities over a sustained period. The spot market transaction prices are expected to continue trending downward.

Based on the current situation where the spot market price of alumina is clearly under downward pressure, market expectations for an increase in alumina supply are becoming more evident. Although the increase in spot supply, especially before the Chinese New Year, remains in a subtle and apparent state, the trading sentiment has undergone a noticeable shift. The trading psychology has become the dominant factor influencing the recent changes in the premium and discount of transactions. In the market, the bargaining power of buyers has improved. Regarding the downward price trend and potential range before the Chinese New Year, on one hand, it is related to the duration of the panic among industry traders and the availability of spot supply, and on the other hand, it is influenced by the frequency of market-making transactions. It is expected that the premium or discount between the real-time market-making transaction prices and quoted prices for individual orders before the Chinese New Year will remain around 200 yuan. The market is accelerating its decline, but with about 15 working days left and the approach of the Chinese New Year, the conditions for a continuous acceleration in the downward trend are not yet fully in place.