






SHANGHAI, May 13 (SMM) - The average price of SMM alumina index was 3,007 yuan/mt in the past session (April 12 - May 11), a moderate increase of 33 yuan/mt or 1.1% compared with the average price in the previous month. As of May 11, the SMM weighted average alumina price stood at 3,016 yuan/mt, with the prices at 2,950-2,980 yuan/mt in Shanxi, 3,020-3,130 yuan/mt in Henan, 2,950-3,060 yuan/mt in Shandong, 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 continued the downward trend in the previous month. As of the time of this report, the price stood at $367/mt, which was a sharp drop of 23% compared with $478/mt in early April, reversing all the gains since mid-February. The price difference between China and abroad also dropped from a high of 1,500 yuan/mt to around 300 yuan/mt. With the narrowing of the price difference, there are signs of opening the import window.
Domestically, the market performance of the mainstream alumina producing areas diversified. The prices rose across the country but for different causes. The rise in north China was mainly due to the mismatch between supply and demand caused by the pandemic. The shipment of long-terms orders was affected, and the spot trading in the market was relatively active, which led to price hikes. Since mid-April, Shanxi was also affected by the pandemic. In order to quickly cut off the transmission of the virus, local pandemic prevention and control measures have been strict. Some high-speed intersections in Xiaoyi city were closed, and the supply and transportation of raw materials for alumina refineries was affected. Inter-provincial transportation of caustic soda and ore was also blocked, adding to production instability. In addition, the current transportation of alumina has basically stagnated, with railway transport still running. But road ransportation has encountered great difficulties. As the shipment of alumina in Shanxi was hindered, the spot transaction in Shandong picked up. And due to its geographical advantage, the transaction in Henan was more active and has been in a leading position. In the south-west region, due to the rapid resumption of work and production of aluminium smelters in Yunnan, the rigid demand has increased significantly. Out of concerns of supply security and future pandemic, aluminium smelters were willing to restock, heightening alumina prices in south-west China.
Looking into the near future, SMM believes that it will still take time for new capacity to yield output and flow into the market. Before the spread of the pandemic has been completely contained, the mismatch between supply and demand in the north may sustain. And owing to the marginal increase in demand in south-west China, the balance of supply and demand in the region will be maintained, and local aluminium smelters will not put pressure on local alumina prices for the time being. In the long run, the operating capacity of Hebei Wenfeng, Chongqing Huabo and Tiangui Phase II has reached 1.2 million mt, 1.8 million mt an 850,000 mt respectively, with more capacity expected. In the long term, alumina will be in oversupply with prices being suppressed. Nonetheless, the prices will not fall significantly from support from the cost side. According to SMM estimates, the industry-wide weighted cost of alumina 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 that in April was 2,999 yuan/mt, up only 39 yuan/mt during this period. In the case of a small increase in alumina prices, rising costs have been eroding the profits. On the raw material side, bauxite will be in short supply and the price is unlikely to fall. Meanwhile, caustic soda plants will undergo seasonal maintenance, and the reduction in output will push up the prices. The 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 with stronger cost support.
For queries, please contact Lemon Zhao at lemonzhao@smm.cn
For more information on how to access our research reports, please email service.en@smm.cn