![](https://static.metal.com/common.metal.com/images/header-en/downward.png)
![](https://static.metal.com/common.metal.com/images/header-en/arrow_right_black.png)
![](https://static.metal.com/common.metal.com/images/header-en/arrow_right_black.png)
![](https://static.metal.com/common.metal.com/images/header-en/arrow_right_black.png)
![](https://static.metal.com/common.metal.com/images/header-en/arrow_right_black.png)
![](https://static.metal.com/common.metal.com/images/header-en/arrow_right_black.png)
![](https://static.metal.com/common.metal.com/images/header-en/downward.png)
SHANGHAI, Dec 5 (SMM) – SMM remained bearish on prices of aluminium in the first quarter of 2019 as supplies will exceed demand, and as the supply glut of alumina will continue to expand.
Global oversupply of alumina may reach 1.77 million mt in the first quarter of 2019, on a potential resumption at Hydro Alunorte alumina refinery, SMM estimates.
Alunorte, the world's largest alumina refinery, has an annual alumina capacity of around 6.3 million mt.
Domestic alumina plants in Sanmenxia and Pingdingshan of Henan province will expand production cuts in December. This will affect around 15% of their daily output.
On supplies of primary aluminium in China, SMM data showed that there will be a supply glut of 370,000 mt in the first quarter of 2019. This means that a rebound in social inventories of domestic primary aluminium may occur at the end of December, at the earliest. Slow consumption during Chinese New Year holiday will account for the supply glut at the start of 2019.
Over the week ended November 29, social inventories of primary aluminium across eight consumption areas in China, including SHFE warrants, decreased by 2.67% to stand at 1.386 million mt, SMM data showed.
We do not expect cutbacks across domestic aluminium producers to expand much before the Chinese New Year after lower production costs narrowed losses.
Total costs for primary aluminium production averaged 14,483.8 yuan/mt as of Friday November 30. This narrowed losses that aluminium producers could incur by 11.67% from a week ago to 983.8 yuan/mt, SMM calculations showed for average smelters.
More downside room is expected for aluminium costs as prices of alumina and prebaked anode decline.
For queries, please contact William Gu at williamgu@smm.cn
For more information on how to access our research reports, please email service.en@smm.cn