Alumina Prices Surge in 2024 Amid Supply Disruptions and Rising Demand

Alumina prices soared to record levels in late 2024, surpassing $780 per tonne in both China and Australia, driven by supply disruptions and robust demand. Prices increased by more than 70% over the year, highlighting the alumina market’s growing vulnerability to supply shocks. While new projects planned for 2025 could help restore balance, the intermediate raw material’s availability will remain critical in 2025.

Key Supply Disruptions in 2024:

• Australia: Environmental regulations and a gas supply disruption in Queensland led to reduced production and exports. Rio Tinto declared force majeure on third-party alumina contracts in May due to a fire-induced gas shortage.
• Brazil: Alcoa faced shipping disruptions when a blocked access channel at Juruti Port halted bauxite exports. Santarem’s waterway issues impacted 99.7% of the country's bauxite exports, tightening alumina feedstock supply.
• Guinea: Customs suspended bauxite shipments from an Emirates Global Aluminium subsidiary in October. Seasonal rains further reduced output by 40% in September, exacerbating global supply concerns.

Impact on Aluminium Production: Global aluminium production reached new heights in 2024, driven by capacity expansions in China’s Inner Mongolia and steady hydropower availability in Yunnan. However, China’s alumina capacity growth lagged behind its rising aluminium output, prompting a 33% increase in alumina imports during the first nine months of 2024, totaling over 123 million tonnes. High alumina prices began to affect production rates globally, with Russian aluminium giant Rusal announcing production curtailments due to elevated costs.

Outlook for 2025 and Beyond: While tight alumina supply is expected to ease, challenges persist:

• Capacity Expansions: China plans to add over 13 million tonnes of alumina capacity in 2025. New facilities are also expected in India (6 million tonnes by Vedanta Resources) and Guinea (2 million tonnes by Emirates Global Aluminium) by 2026.
• Projected Surplus: UBS forecasts a 960,000-tonne alumina surplus in China next year and a global surplus of 890,000 tonnes, a significant turnaround from 2024’s deficits.
• Bauxite Constraints: Despite capacity expansions, China remains heavily reliant on imported bauxite (70% of supply), with Guinea accounting for 72% of imports from January to September 2024. Guinea’s bauxite output will continue to face risks from seasonal rains, labour disputes, and infrastructure limitations.

The alumina market’s reliance on fewer supply sources underscores its susceptibility to shocks. While surpluses are anticipated in 2025, the market’s inherent tightness and external risks will likely keep alumina a key factor influencing aluminium prices in the coming year.