China’s alumina outlook for February and review for January

SMM data showed that China’s metallurgical-grade alumina output stood at 6.72 million mt in January (31 days), and the daily average output was 216,800 mt/day, down 9,800 mt/day MoM. The total output was down 1.10% MoM but up 5.5% YoY. The existing alumina capacity in China was 100 million mt, the operating capacity was 79.14 million mt, and the average operating rate stood at 79.1%.

In Shanxi, the operating rate in January was 66.7%, down 2.5% MoM. The operating rate declined as tight ore supply forced output cut. In Henan, the operating rate was 56.7%, down 5.2%. Some alumina refineries in Sanmenxia further suspended or cut production, and a few resumed production in early February as the local heavy pollution weather warning was lifted. In Guizhou, the output of a few refineries was affected by equipment maintenance, others were willing to ramp up driven by profit margins and downstream demand, and the operating capacity increased by 100,000 mt, thus the local operating rate increased by 1.5% to 86.0%; the alumina production in Hebei was generally stable, and the operating rate rose by 0.8% to 88.3%; in Guangxi, the operating rate inched down by 0.8% to 84.1%, an output of about 25,000 mt was curtailed due to insufficient ore supply and equipment maintenance; in Shandong, the operating rate was up 1.6% to 95.2%, some local refineries resumed normal production in early February after local heavy pollution weather warnings lifted. The operating rate of other alumina refineries in Shandong was stable.

Forecast for February: According to SMM research, mines that are currently suspended in Shanxi and Henan have no plans to resume production in February. The shortage of local ore supply will continue to limit production capacity, affecting overall operating rates; in Guangxi, enterprises that are curbed by ore supply issues may find it difficult to return to full production shortly; a refinery in Guizhou suspended production in early February due to CNY holiday, and initially planned to resume production in late February. In Shandong and Henan, some roasting production capacities restricted by environmental protection policies have now resumed. However, as heavy pollution weather occurred frequently in north China, refineries may face a new round of production controls. SMM estimates that the alumina daily average output will be 217,400 mt/day in February 2024, and the total operating capacity will be 79.34 million mt, up 0.25% YoY.