Alumina

Alumina (aluminium oxide, Al2O3) is the intermediate step that almost nobody sees: the white powder refined from bauxite ore by the Bayer process and then smelted into aluminium metal by the Hall-Heroult process. It takes roughly two tonnes of alumina to make one tonne of aluminium, and essentially all of it exists to feed smelters, so alumina is really a tollgate between the mine and the metal.

China dominates, refining well over half of the world's alumina, with Australia a distant second and Brazil third; the bauxite feedstock increasingly comes from Guinea, which is why a West African export problem can move the Chinese price. That dependence produced the defining episode: in 2024 alumina spiked violently, Western Australian cargoes more than doubling toward 800 dollars a tonne, before collapsing by more than half through 2025 as supply recovered.

The contracts are newer than aluminium's. The physically-delivered benchmark is the Shanghai Futures Exchange alumina contract, 20 tonnes a lot in yuan per tonne, launched in 2023; the London Metal Exchange lists cash-settled alumina contracts (from 2019 and 2021) in dollars per tonne, settled against published FOB Australia indices. Together they finally gave the aluminium chain a way to hedge its single largest raw-material cost.