Why is alumina oversupply squeezing electrolytic aluminum profits despite high aluminum prices?

Why is alumina oversupply squeezing electrolytic aluminum profits despite high aluminum prices?
China's alumina market is mired in structural oversupply. Operating rates have fallen to 74.4%, yet installed capacity stands at a massive 113 million tons, with exchange warehouse receipts nearing 470,000 tons. Spot alumina prices around 2,662 yuan/ton sit at the industry's breakeven edge. This glut is directly pressuring cost structures downstream: electrolytic aluminum producers with high alumina self-sufficiency, like some leaders, saw Q1 earnings miss expectations. Meanwhile, aluminum billet inventories are falling as producers shift to higher molten metal ratios (71%, heading to 75.5%), cushioning the rise in aluminum ingot stocks. The oversupply is also driving high-cost alumina capacity toward shutdown, with futures breaking below 2,600 yuan/ton, a level under cash costs for most domestic producers.