Overseas Alumina Prices Continued to Fall, While Domestic Prices Inched Higher amid Improved Trades

SHANGHAI, Apr 25 (SMM) - As of last Friday, the SMM weighted alumina index stood at 3,010 yuan/mt, up 16 yuan/mt from a week ago. The prices stood between 2,950-3,060 yuan/mt in Shandong, 3,020-3,100 yuan/mt in Henan, 2,950-2,980 yuan/mt in Shanxi, 2,960-3,040 yuan/mt in Guangxi, 3,000-3,050 yuan/mt in Guizhou, and 3,150-3,200 yuan/mt in Bayuquan.

Alumina prices FOB Western Australia fell further to $371/mt as of last Friday as alumina that was originally intended to be exported to Russia has now begun to flow into the overseas spot market. The price difference between China and overseas has shrunk from 1,500 yuan/mt to the current 150 yuan/mt. Although the import window was closed in March, nearly 180,000 mt of imported alumina entered the Chinese market. Once the import window opens, surplus alumina from overseas will probably enter China, which will shock the domestic alumina prices.

Alumina prices rose in both north and south China, but for different reasons. The price rise in the north was primarily driven by regional supply-demand imbalance caused by the pandemic. Trades in the spot market turned active after deliveries of long-term orders were hindered, sending spot prices higher. Transportation and transactions in Shanxi virtually stagnated amid strict pandemic control measures. With the effective control of the pandemic in Shandong, the local spot transactions picked up. Thanks to its geographical advantage, the transactions in Henan were even more active, hence the local prices led the gains. In south-west China, aluminium smelters stocked up due to production resumptions and concerns about the pandemic, boosting the local alumina prices.

Given the slow release of new alumina capacity, domestic alumina prices are unlikely to drop sharply before the pandemic is brought under control.  However, in the long run, alumina prices may fall from highs due to inflows of imported alumina, less-than-expected alumina exports and release of new capacity.