Alumina
SHFE / LME
The white powder between bauxite and aluminium, where one disruption in Guinea sent the price on a record round trip.
The white powder between bauxite and aluminium, where one disruption in Guinea sent the price on a record round trip.
Top Producers
approximate share of world alumina production (indicative, 2024)
Main Uses
indicative split of alumina demand
Can it be a contract?
8 of 8 tests passed
- Written grade spec: passes. A published specification a buyer will accept sight-unseen.Published grade specification
- Fungible: passes. Any lot of the grade substitutes for any other.Any lot substitutes for another
- Dispatchable: passes. Available at the cadence the buyer needs. Storage is only one route to that; generation and continuous flow are others, which is why power trades without being storable.Available on demand from stock or flow
- Delivery point: passes. A point the trade already uses can stand for the market. A contract cannot invent a delivery location; it has to adopt one the physical flows already run through. The clearest proof that a point qualifies is a liquid basis market against it: every other US gas hub quotes as a spread to Henry Hub, every ISO node settles against its hub, and grades quote as differentials to Brent. Where a point has no basis market quoting off it, it is not really the delivery point.SHFE delivery warehouses and an LME cash basis
- Observable spot price: passes. Somebody publishes or assesses a price the trade recognises.Continuously quoted
- Many on both sides: passes. Enough independent buyers and sellers that no one party sets the price.Many independent buyers and sellers
- Volatility worth hedging: passes. Prices move enough that someone needs to transfer the risk.Moves enough to need hedging
- Enforceable venue: passes. Contracts can be written and enforced where both sides trust the courts. This is separate from the delivery point and often decides it: Russia and Saudi Arabia sit on enormous, long-established physical flows and no forward settles in either, because the flow test passes and the law test does not.Enforceable in a trusted jurisdiction
Forward market: Yes
Passes, with freight against value the limiting factor.
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Ratio
about 2 tonnes of alumina per tonne of aluminium
structural
Largest refiner
China, well over half of world output
as of 2024
Futures
SHFE (physical, 2023); LME (cash-settled)
as of 2026
Price swing
about $330 to $810/tonne and back (2024-25)
2024-2025
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.
How It Trades
| Venue | Shanghai Futures Exchange (physical); London Metal Exchange (cash-settled) |
| Benchmark contract | SHFE alumina (2023, physical); LME alumina (2019/2021, cash-settled vs FOB Australia indices) |
| Contract size | SHFE: 20 tonnes per lot; LME: cash-settled in USD per tonne |
| Price terms | Yuan per tonne (SHFE); US dollars per tonne (LME) |
| Settlement | SHFE physical in China; LME cash-settled against Platts / Fastmarkets-CRU indices |
| Typical curve | Driven by bauxite supply, refinery outages, and Chinese smelter demand |
| Liquidity | SHFE is the active physically-delivered market; LME contracts give dollar cash-settled exposure |
Supply and Demand
Top producers
- China: well over half of world alumina refining
- Australia: the largest exporter of alumina and bauxite
- Brazil, India, and Russia: the next tier
- Guinea: the key bauxite (ore) supplier to China
Alumina is refined from bauxite and smelted into aluminium; China dominates refining. Shares approximate.
Top consumers
- Aluminium smelters worldwide (essentially the entire demand)
- China above all, as the largest aluminium producer
- Middle East, India, and Russia smelting hubs
Major uses
- Feedstock for primary aluminium smelting (the overwhelming use)
- A small share into abrasives, refractories, and ceramics
What Moves the Price
- Bauxite supply, above all from Guinea
- Chinese alumina refinery operating rates and outages
- Aluminium smelter demand and metal prices
- Energy costs (refining is energy-intensive)
- Export policy and trade flows
Moments That Made the Market
2019 & 2021
The LME launches cash-settled alumina contracts against FOB Australia indices.
2023
The Shanghai Futures Exchange launches the first physically-delivered alumina future.
2024-2025
A Guinea-driven bauxite squeeze sends alumina to records near $800/tonne, then it halves.
What Changed Since the 2010 Era
- Alumina got its own futures market, separate from aluminium.
- China's reliance on Guinean bauxite became a first-order price driver.
- The 2024 spike showed how violently the intermediate can move.