SUZHOU, Dec 4 (SMM)—China’s alumina market is likely to see a supply deficit of 361,000 mt in 2020, and the annual average operating rate at alumina plants are expected to stand at 78.03%, said Joyce Li, senior aluminium analyst at SMM.

Speaking at the 2020 Nonferrous Metals Industry Chain Annual Conference in Suzhou, Jiangsu province on December 4, Li analysed the alumina market in China and made a forecast for 2021.

“Operating rates at Chinese alumina plants hovered at low levels in 2020, and demand and supply of alumina remained in tight balance,” said Li.

As of early December, there was 68.65 million mt among 88.4 million mt per year of exising alumina capacity in operation. For the first ten months of 2020, China produced a total of 55.74 million mt of metallurgical-grade alumina, down 3.23% year on year, and the output is expected to reach 67.54 million mt by the end of the year, down 1.65% from a year ago.

“China remained a large alumina importer in 2020, importing 3.15 million mt of alumina in January-to-October, a year-on-year increase of 205.15%, and the figure is likely to rise to about 3.93 million mt at the end of 2020,” Li added.

China’s alumina market is likely to see a supply deficit of 361,000 mt in 2020, and the annual average operating rate at alumina plants are expected to stand at 78.03%.

As for production costs, Li said that domestic bauxite prices gave up those gains obtained in the past two years in the first half of 2020 due to the breakout of the Covid-19 pandemic, and prices only rebounded slightly in the second half of the year.

Costs at Chinese alumina producers were the highest in the globe in 2019, and diverged in different provinces. Weighted average cash cost of alumina in China stood at 1,926.9 yuan/mt in the first three quarters of 2020, while weighed average full cost at 2,187.9 yuan/mt, with Guangxi and Shandong boasting evident cost advantages.

Source: SMM

Source: SMM

Costs are likely to rise further in Q4 as prices of bauxite, caustic soda and coal are expected to increase. And this, together with low alumina prices, will further expand losses at alumina plants in Shanxi, Henan and Inner Mongolia.

Source: SMM

2021 will be a peak year for commissioning of alumina capacity in China, while overseas oversupply will intensify and the pressure will increase in 2021, Li expected.