Overseas Alumina Prices Erased Previous Gains, While Domestic Prices Inched Higher

SHANGHAI, Apr 11 (SMM) - As of last Friday, the SMM weighted alumina index stood at 2,989 yuan/mt. The prices stood between 2,950-2,980 yuan/mt in Shanxi, 2,920-3,030 yuan/mt in Shandong, 3,000-3,030 yuan/mt in Henan, 2,960-3,020 yuan/mt in Guangxi, 2,990-3,030 yuan/mt in Guizhou, and 3,200-3,300 yuan/mt in Bayuquan.

Supply tightness in the overseas alumina market eased after Australia banned alumina exports to Russia, which now flowed into the spot market, weighing alumina prices FOB Western Australia from the high of $535/mt in March to $410/mt as of April 8, a drop of 23.4%, and there will still be room for further decline. The price difference between China and overseas has shrunk from 1,500 yuan/mt to the current 530 yuan/mt. Shrinking profits and spreading COVID affected export business.

The domestic market are still full of bullish and bearish factors.

Bullish aspects: The prolonged bauxite shortages in Guizhou are threatening the operations of local alumina refineries. The high costs and regional supply-demand imbalance caused by the pandemic encouraged alumina refineries in Shanxi and Henan to raise their offers slightly last week. With the accelerated resumption of aluminium production in south-west China, the domestic operating aluminium capacity is estimated to exceed 40 million mt in April. Restocking by local aluminium smelters lifted alumina prices in Guangxi and Guizhou.

Bearish aspects: Currently, alumina exporters barely have any profit following the slump in overseas prices, which may make future exports unsustainable. SMM projects that the operating alumina capacity will increase by at least 300 million mt MoM at the end of April due to the release of new capacity, which will gradually shift the market to a surplus.

SMM believes that the short-term fundamentals in China will still be stronger than in the overseas market. The domestic prices will remain firm before the massive release of new capacity.