Core Insights - The basis of alumina futures is expected to change, reflecting the difference between spot and futures prices, which is a normal occurrence driven by various factors [1] Group 1: Factors Influencing Basis Changes - Supply and demand dynamics: Short-term shortages or surpluses in the spot market, such as production increases or decreases in electrolytic aluminum plants, directly impact the basis [3] - Futures contract expiration: As the delivery month approaches, the basis typically converges, meaning futures prices align more closely with spot prices [3] - Storage and transportation costs: Logistics bottlenecks, such as port inventories and railway capacity, can widen the basis [3] - Policies and tariffs: Adjustments in export tariffs and environmental production limits may cause regional basis fluctuations [3] Group 2: Basis Change Patterns - Positive basis (spot premium): Common during periods of spot shortages, such as the 2022 European energy crisis that led to reduced aluminum production and a premium for spot alumina [3] - Negative basis (futures premium): Anticipation of future surpluses, such as new mines coming online, may lead futures prices to reflect this ahead of time [3] Group 3: Implications for Traders - Hedging: Companies need to dynamically adjust positions to hedge against basis risks [3] - Arbitrage opportunities: Deviations from historical averages in the basis may present opportunities for spot-futures arbitrage [3] - Delivery decisions: As the delivery month approaches, it is essential to assess the convergence path of the basis [3]