Alumina Price Slump Not Deep Enough to Trigger Massive Output Cuts, SMM Says

SHANGHAI, Apr. 26 (SMM) – While alumina prices in China have been falling steadily of late, most producers may not yet feel big pain to reduce or halt production, SMM expects.

Currently, alumina prices are already below the highest production cost, driving small and medium producers into loss-making territory, SMM learned. However, with decent profit in late 2016, current losses have not triggered production cuts or halts, except Shandong Wudi Qixing Hi-Tech Aluminum, who closed because of financial problems. Only a few small producers, who are struggling in losses, are mulling over production cuts or halts. 

Given high output nationwide and stubbornly high inventories at some alumina producers, there is still room to fall for alumina prices, SMM predicts. 

The price declines will slow down, though. Aluminum prices rose thanks to capacity cut policy, boosting profit at aluminum smelters. Trading in alumina market has shown signs of improvement now that alumina prices have fallen below the highest production costs. These will help slow down the pace of fall in alumina prices, SMM understands.

China’s alumina output increased 26.82% year-on-year to 5.83 million tonnes in March, SMM data showed. 
 
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