Alumina Prices Show Signs of Accelerated Declines

SHANGHAI, Jun 9 (SMM) – Alumina prices dropped in both north and south China. The market was challenged by rising supply of spot goods after the new capacities started to yield output. Some manufacturers with high in-plant stocks lowered their offers, while a few buyers purchases on dips. The traders were wait-and-see.

On the supply side, the fundamentals of alumina were relatively bearish. The operating alumina capacity of Hebei Wenfeng Alumina Refinery has reached 2.4 million mt, and the output in May has been fully released. In south-west China, the operating capacity of Chongqing Wanbo stands at 3.6 million mt, and is expected to rise by another 1.2 million mt to 4.8 million mt in total, which will significantly heighten the alumina supply in the region.

However, the acceptable prices of buyers and sellers differ more palpably. Alumina refineries, as the sellers, now face problems like tight ore supply, high caustic soda prices as well as high operating costs, which will squeeze their profits. In addition, alumina refineries usually sell in the form of long-term orders that are more stable, and few of them would sell spots unless the inventory pressure is extremely high.

In terms of the buyers, the speculators will not easily participant in market transactions when the prices fall, while aluminium smelters mostly secure their supplies through long-term orders, and they also have low restocking demand after the Dragon Boat Festival.

On the whole, the game between the buyers and sellers continue, and the market is tilting toward the buyers.

As of today, SMM regional weighted alumina index stood at 2,972 yuan/mt, down 14 yuan/mt from yesterday.