Zhongjin: Aluminum Oxide Losses Increase, Price Expected to Turn from Bad to Good

Zhongjin released a research report stating that the overall supply of the alumina industry is showing a slight contraction trend, with the loss area of alumina in January 2026 significantly expanding compared to December 2025. From a profitability perspective, the loss area of the alumina industry is expanding, and the supply contraction is expected to stimulate a price rebound. The promotion of anti-involution in the alumina industry focuses on strengthening management and optimizing layout to reshape the supply and demand pattern. In addition, the bank believes that the change in mining policy after the new president of Guinea takes office in 2026 may disrupt the global bauxite supply pattern, thereby stimulating a price reversal upwards. Key points of Zhongjin are as follows: Industry status According to SMM, in January 2026, China's metallurgical-grade alumina production decreased by -1.8% month-on-month and -2.6% year-on-year; as of the end of January, the nation's total installed capacity was 110.32 million tons, with operating capacity decreasing by -1.8% month-on-month and -3.6% year-on-year, indicating an overall slight contraction in industry supply. According to ALD, in January 2026, the total cost loss capacity of the alumina industry was 62.85 million tons, accounting for 64.9%; the cash cost loss capacity was 23.05 million tons, accounting for 23.8%, and the loss area expanded significantly compared to December 2025. From a profitability perspective, the expansion of the loss area in the alumina industry and the supply contraction are expected to stimulate a price rebound The bank believes that although the fundamentals of the alumina industry maintain a situation of oversupply, it is difficult for the profit pattern where the total cost loss exceeds 60% and the cash cost loss exceeds 20% to be maintained for a long time. Once companies start shutting down capacity due to excessive losses, the supply contraction is expected to drive a rapid price rebound. In the short term, the direction of supply contraction is clear as the increased capacity of inspections and shutdowns. In the short term, although there has not been a cessation of capacity due to direct losses, the industry's maintenance capacity has begun to increase. According to ALD, in the final week of January 2026, the industry's maintenance capacity reached 1.5 million tons, accounting for 1.6%. From the perspective of anti-involution, reshaping the pattern is expected to drive the centralization of prices The bank believes that the promotion of anti-involution in the alumina industry focuses on strengthening management and optimizing layout, conducting strict project compliance reviews and environmental energy consumption monitoring for existing projects, and meeting national industrial control requirements for new projects to prevent blind investments and disorderly construction, which may suppress long-term supply and reshape the alumina supply and demand pattern. From the perspective of Guinea, mining policy disruptions are expected to drive bauxite and alumina prices to rise Guinea has a significant impact on the global supply of bauxite, with CRU and Chinese customs data showing that in 2025, Guinea accounted for 40.6% of global bauxite production and 74.3% of China's bauxite imports. The bank believes that the change in mining policy after Guinea's new president takes office in 2026 may disrupt the global bauxite supply pattern, thereby stimulating a price reversal upwards. Risks Production cuts fall short of expectations, costs decline more than expected, and supply exceeds expectations.