SMM Forecast for Short-Term Alumina Price Outlook

SHANGHAI, Apr 29 (SMM) - Alumina prices remained flat recently amid a lack of price guidance from large-scale transactions. Aluminium smelters showed little interest in buying in the spot market before the Labour Day holiday as they relied on supply long-term orders.

Logistics was hindered by pandemic, encouraging alumina refineries to hold offers firmly. Limited alumina was available in the market due to transportation restrictions. Shipments by railway and truck fell sharply, while prices of raw and supplementary materials all rose, increasing alumina costs significantly. Alumina refineries in the north suffered from high costs and shrinking profits, and thus were reluctant to lower offers. New alumina capacity is about to be released on a large scale, triggering concerns over supply glut Other bearish factors include: Sharp pullback of aluminium prices; about 150,000 mt of imported alumina may flow into China as the import window may open again amid sharp drop in overseas prices; closed export window.

According to SMM’s estimates, the weighted average cost of alumina refineries in early April was 2,803 yuan/mt, which was 104 yuan/mt higher than that in early January. The average price of alumina in January was 2,960 yuan/mt, while the average price of alumina in April was 2,994 yuan/mt, up just 34 yuan/mt. Given small increase in alumina prices, rising costs have eroded profits. Domestic bauxite prices are unlikely to fall on the back of tight supply. Caustic soda plants will undergo seasonal maintenance, which may push up caustic soda prices. Solid cost support will limit decline in alumina prices. Alumina prices are expected to move between 2,800-2,850 yuan/mt in north China and  2,750-2,800 yuan/mt in south-west China in the short term.