Alumina Market Faces Supply Challenges: What’s Next for 2025?

Alumina prices hit record highs in 2024 due to supply disruptions; outlook for 2025 shows potential for relief but risks remain.
Aluminium

As alumina prices soared to record highs in late 2024, global markets are bracing for more supply disruptions in the coming year. Alumina, the key raw material for aluminium production, faced significant supply shortages due to a combination of environmental regulations, production stoppages, and logistical challenges across major supplying countries. While new projects are expected to alleviate the pressure in 2025, the alumina market remains vulnerable to supply shocks that could impact aluminium prices in the near future.

Supply Disruptions Drive Alumina Prices to Record Levels

Alumina prices surged by over 70% in 2024, with prices peaking above $780 per ton in both China and Australia by November. This price spike was driven by multiple disruptions across the globe, including lower exports from Australia, logistical bottlenecks in Brazil, and production suspensions in Guinea.

In Australia, the tightening of environmental regulations and a fire-related disruption in Queensland affected alumina production, leading to force majeure declarations from major suppliers like Rio Tinto. Meanwhile, in Brazil, Alcoa also declared force majeure in November due to the closure of the Santarem harbor, which blocked access to one of the country’s main bauxite export terminals.

In Guinea, seasonal rains and infrastructure issues led to a nearly 40% reduction in bauxite shipments. Despite these challenges, Emirates Global Aluminium (EGA) indicated that the suspension would not immediately impact its operations, although concerns about long-term supply remained.

Demand and Supply Outlook for 2025

The global aluminium production continued to rise in 2024, particularly in China, where new production capacities came online. Despite this, China’s alumina production has failed to keep pace with aluminium output, leading to a sharp rise in alumina imports. By the end of September, China had imported over 123 million tons of alumina, a 33% increase compared to the same period in 2023.

However, relief may be on the horizon. In 2025, China is set to add more than 13 million tons of new alumina capacity, while other key players, including India’s Vedanta Resources and Guinea’s EGA, are planning significant new alumina refining projects that could ease the global supply squeeze by 2026. UBS forecasts a surplus of 960,000 tons of alumina in China next year, a dramatic turnaround from the deficit observed in 2024.

Despite these optimistic forecasts, challenges remain. The tightness in bauxite supply—especially from Guinea, which supplies 72% of China’s alumina imports—could continue to limit alumina production in China. Environmental regulations in China’s key bauxite-producing provinces, coupled with logistical issues in Guinea, mean that alumina markets will likely remain susceptible to disruptions throughout 2025.

Conclusion

While new alumina production capacities are expected to ease supply pressures in the coming years, the market remains highly vulnerable to supply shocks. Stakeholders in the alumina and aluminium industries will need to closely monitor the situation in major producing regions, particularly in Guinea and China, as these could have significant implications for aluminium prices in 2025. With alumina supply still concentrated in a few key regions, the risk of further disruptions remains high, and the industry must prepare for potential volatility.

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