SHANGHAI, Oct 17 (SMM) - Price review: As of last Friday, the SMM weighted alumina index stood at 2,833 yuan/mt, down 16 yuan/mt from September 30. The prices stood between 2,750-2,850 yuan/mt in Shandong (down 25 yuan/mt), 2,900-2,920 yuan/mt in Henan (down 10 yuan/mt), 2,760-2,800 yuan/mt in Shanxi (down 15 yuan/mt), 2,780-2,820 yuan/mt in Guangxi (down 10 yuan/mt), 2,760-2,860 yuan/mt in Guizhou (down 50 yuan/mt), and 2,950-3,000 yuan/mt in Bayuquan.
Overseas market: A deal for 30,000 mt of alumina was done at $310/mt FOB Western Australia on October 13, for shipment in November, and the destination was unknown. The price was $10/mt lower than that on September 29 and equivalent to 2,891 yuan/mt CIF major ports in China. The price gap between China and overseas showed signs of narrowing amid continuous decline in the latter, but the import window has not yet opened.
Domestic market: The prices fell across all the major producing regions. Under the shadow of pessimism, the prices showed no signs of stabilising any time soon. SMM data showed that the weighted average cost in the alumina industry was close to 2,850 yuan/mt at the end of September, an increase of 40 yuan/mt MoM. Rising costs failed to underpin alumina prices. The average alumina price lost 44 yuan/mt MoM in September. At present, only a handful of alumina refineries in Shandong, Guangxi, Hebei and Chongqing are still making profits, while those in Shanxi and Henan are suffering different degrees of losses. With the continuous release of new capacity, alumina refineries in high-cost areas have little bargaining power.
Price evolution: The pandemic broke out again across many parts of China after the National Day holiday. The strict pandemic controls in Shanxi’s Xiaoyi city have led to a sharp decline in truck transportation, disrupting the shipments of both spot cargoes and cargoes under long-term contracts. If local alumina refineries report inventory backlog, they may dump their cargoes at lower prices after the transportation restrictions are lifted. An 800,000 mt/year alumina refinery in Chongqing began to curtail its production in early October and is expected to be shut down entirely in late October. Another 450,000 mt/year alumina refinery in Shanxi also began to scale back its production this month and is expected to be closed completely by the end of the month. Considering that the market supply is expected to decline, the price decline may slow down.
