SHANGHAI, Dec 13 (SMM) - The average monthly SMM alumina price stood at 2,799 yuan/mt (November 11-December 9), up 4 yuan/mt from the previous month. In late November, alumina prices rebounded rapidly, ending the three-month decline.
As of December 9, alumina FOB Western Australia stood at $320/mt, or 2,824.34 yuan/mt CIF major Chinese ports with the ocean freight of $29/mt, down 49.66 yuan/mt compared with domestic prices. The import window of alumina remained closed since August 22, 2022, and opened three months later amid the rebounding domestic alumina prices, the falling ocean freight, the dropping US dollar index, etc. However, the spread between the domestic and overseas markets was narrow, and there was not enough space for arbitrage. The market has not witnessed a great number of import orders, and SMM will pay close attention to it.
In mid-November, domestic alumina prices continued to fall, greatly reducing the refineries’ profits. According to SMM data, without considering premiums and discounts, refineries in Shandong lost 140 yuan/mt, those in Henan lost 320 yuan/mt and those in Shanxi suffered a loss of 380 yuan/mt based on the alumina prices in mid-November. Alumina refineries in north China were severely struck by the losses. They were reluctant to produce except for the delivery of long-term orders. The market trading was extremely sluggish.
In late November, alumina prices in the north stabilised, while those in the south-west dropped further. With the arrival of the heating season, many places in north China have issued warnings for heavy air pollution, limiting the production of some roasting machines. Alumina refineries in the north were reluctant to sell amid the frequent production cut aroused by losses and the growing raw material prices, and the prices stopped falling and stabilised in stages.
On the contrary, alumina prices in the south-west dropped further. Production resumption of aluminium producers in Sichuan was slow, and those in Yunnan still strictly controlled their production. Alumina prices bore pressure from the supply surplus in south-west China. Some cargo holders had to lower their prices and shipped the finished products to the north.
From the end of November to early December, the alumina prices bounced back quickly due to a sudden reduction in production. With the arrival of the heating season in Shanxi and Shandong, warnings of heavy air pollution were issued frequently, hence the local alumina refineries cut their output, and production of the roasting machines with a capacity of about 5 million mt was suspended for about one week.
Alumina prices rebounded due to multiple factors such as the tightening regional supply and the COVID-19-related transportation restrictions in Binzhou, Luoyang and other places at the end of the month. In south-west China, the production of an alumina refinery in Guangxi was suspended for about one week owing to equipment failure, and its output dipped 40,000 mt. The production cuts in north and south China enabled the cargo holders to insist on their high quotes, and the prices began to grow.
The overall alumina trading picked up in November. In north China, especially Shanxi and Henan, alumina producers cut their output on a large scale due to low profit margins, raw material shortage, the heating season and other reasons. The spot supply in these regions could barely improve sharply in a short term, thus the cargo holders held their prices firm, and the quotes kept rising. Near the end of the year, aluminium refineries will continue to restock raw materials, and the traders will also actively participate in the market trading. Alumina prices will thus edge higher. The alumina prices in the north are expected to soar to more than 3,000 yuan/mt, and those in the south-west will climb to about 2,900 yuan/mt.
