Alumina Markets Diverged between North and South China

SHANGHAI, Aug 1 (SMM) - As of last Friday, the SMM weighted alumina index stood at 2,969 yuan/mt, up 2 yuan/mt from a week ago. The prices stood between 2,950-3,050 yuan/mt in Shandong, 2,980-3,070 yuan/mt in Henan, 2,890-2,930 yuan/mt in Shanxi, 2,950-3,010 yuan/mt in Guangxi, 2,880-2,960 yuan/mt in Guizhou, and 3,100-3,150 yuan/mt in Bayuquan. Only Shanxi saw an increase of 5 yuan/mt. 
Alumina prices FOB Western Australia fell $2/mt from a week ago to $330/mt as of last Friday, which was equivalent to 2,975.7 yuan/mt CIF China and 6.74 yuan/mt higher than the domestic spot prices. The ocean freight stood at $50/mt. More alumina was available in the overseas market with the sustainable exports from China, allowing the price difference between the two to gradually narrow.
The alumina markets continued to diverge between north and south China. One alumina refinery in Shanxi is expected to reduce its production for environmental protection reason. Local alumina refineries held their offers firmly due to poor profitability, with the sellers quoting around 2,920 yuan/mt, while the bid prices were 50 yuan/mt lower, leaving the negotiations in a deadlock. Although it is difficult for alumina prices in north China to fall in the short term, there may be little upside room, either. In south-west China, alumina refineries in Guangxi and Guizhou still have certain profit, but the local prices are the same as or even higher than those in the north. As such, deals may be done at lower prices in Guangxi and Guizhou in the future. 
The price rise in north China was driven by higher costs and environmentally-induced output cuts. In south-west China, there may be some room for price correction with the output release from Bosai Wanzhou, as well as Tiangui’s Phase II and Phase III projects. It is expected that the alumina prices will continue to fluctuate within a narrow range this week, with eyes on the operation of alumina refineries in Shanxi.