SHANGHAI, Oct 31 (SMM) - Price review: The SMM weighted alumina index stood at 2,792 yuan/mt as of last Friday, down 7 yuan/mt from a week ago. The prices stood between 2,700-2,770 yuan/mt in Shandong (down 15 yuan/mt), 2,860-2,900 yuan/mt in Henan, 2,750-2,790 yuan/mt in Shanxi, 2,720-2,770 yuan/mt in Guangxi (down 5 yuan/mt), 2,690-2,770 yuan/mt in Guizhou (down 35 yuan/mt), and 2,900-2,950 yuan/mt in Bayuquan.
Overseas market: Only one transaction was heard last week. One deal for 30,000 mt of alumina was done at $314/mt FOB Eastern Australia on October 27, for shipment in late November or early December, and the destination was unknown. The quotations stood at $310/mt FOB Western Australia last Friday, equivalent to 2,915.66 yuan/mt CIF major ports in China, which was 123.96 yuan/mt higher than the domestic spot prices. With the continuous fall in domestic alumina prices, the import window is still difficult to open.
Domestic market: The decline in alumina prices showed signs of slowing down. The alumina refineries in Shanxi and Henan provinces are all suffering losses. A combined 1.2 million mt of alumina capacity of Zhongmei Aluminium (400,000 mt), Taixing Aluminium and Magnesium (400,000 mt) and Xiaoyi Huaqing (400,000 mt) has been shut down. Affected by raw material shortfalls and high energy prices, Shanxi Jiaokou Xinghua has shut down a 550,000 mt/year production line while maintaining just 350,000 mt of capacity in operation. The production cuts, together with firm raw material prices (bauxite and caustic soda), allowed the alumina prices in Shanxi and Henan to stabilise. However, the prices in Guangxi and Guizhou provinces continued to fall as tight hydropower supply and weak aluminium prices slowed the production resumptions of aluminium smelters in Sichuan province while smelters in Yunnan province have maintained the 20% production cuts and are unlikely to resume their production any time soon. Up to now, only 500,000 mt of aluminium capacity in Sichuan has been brought back into operation, while the remaining 500,000 mt remains closed.
Price evolution: Alumina prices in high-cost areas have stabilised for the time being. However, with the release of new capacity from Lubei Chemical (1 million mt) and Luyu Bochuang (1 million mt) in Shandong in the future, the supply in north China will be in a surplus and the prices will drop again. Alumina prices in south-west China will fall more sharply than in north China due to output cuts by local aluminium smelters. Overall, the alumina market remains pessimistic.
