China's alumina export sees limited downward room on profit support

SHANGHAI, May 7 (SMM) – The volume of China’s alumina exports is set to decline but the downward room is limited as profits remain, SMM believes.

China exported more than 300,000 mt of alumina as of May 4, since the profit window opened in April following the US sanctions against Rusal, SMM learned. The origins of these materials were mostly from Shandong and Guangxi provinces, but have recently expanded to Shanxi province. 

Alumina output in Shandong and Guangxi is unlikely to see significant drops and production in Shanxi as well as Henan provinces are rising on export margins, SMM believes.

Major producers and traders now prefer exports over domestic sales as export prices hit 3,300 yuan/mt ex-works, tax inclusive. This compared with an average of 3,118 yuan/mt in the domestic market, according to SMM assessments.

Compared with foreign materials, Chinese alumina is more competitive despite its poorer quality. Australian alumina prices stood at $643.5/mt as of Friday May 4, according to SMM assessment, as global supply remained tight. No alumina from Rusal has been heard in the market even though the sanctions have somewhat eased.

In Brazil, output cut at Hydro’s Alunorte has led to a monthly loss of 267,000 mt and the refinery is only likely to resume production in July.

On the operational level, it costs a mere 5 yuan/mt to switch bag-packed Chinese alumina into bulk loaded, and few technical issues were heard on port capabilities. SMM learned that alumina exports at Qinzhou port in Guangxi last week were slowed down due to temporary congestion.  
  
SMM believes China’s alumina exports are likely to put pressure on international prices. At an export rate of some 200,000 mt per month, Chinese alumina prices are likely to hover above 3,000 yuan/mt.

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