Alumina Prices Lurched Higher as Natural Gas Shortages Constrained Roasting Capacity of Some Refineries

Published: Jan 16, 2023 16:39

Source: SMM

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SHANGHAI, Jan 16 (SMM) - Price review: As of last Friday, the SMM weighted alumina index stood at 2,933 yuan/mt, up 4 yuan/mt from a week ago.

SHANGHAI, Jan 16 (SMM) - Price review: As of last Friday, the SMM weighted alumina index stood at 2,933 yuan/mt, up 4 yuan/mt from a week ago. The prices stood between 2,860-2,960 yuan/mt in Shandong, 2,930-3,030 yuan/mt in Henan (+15 yuan/mt), 2,940-2,990 yuan/mt in Shanxi, 2,830-2,930 yuan/mt in Guangxi (+20 yuan/mt), 2,820-2,880 yuan/mt in Guizhou (+5 yuan/mt), and 2,900-3,000 yuan/mt in Bayuquan.

Overseas market: Alumina prices rose $18/mt from a week ago to $348/mt FOB Western Australia last Friday, equivalent to 2,946.71 yuan/mt CIF major ports in China, which was 13.71 yuan/mt higher than the domestic spot prices. The import window was closed again. Following news on January 9 that Kwinana alumina refinery will cut its production by 30%, bullish sentiment emerged in the overseas alumina market, driving a price rally.

Domestic market: Alumina prices inched higher amid sporadic transactions. As the CNY holiday is drawing near, transactions in the spot market dropped significantly, except for deliveries of long-term orders and urgent orders. The roasting furnaces of some alumina refineries in Shanxi, Chongqing, and Hebei were unable to operate due to natural gas shortages, reducing the amount of alumina that was available in the market. This forced aluminium smelters in north-west China to source alumina from Henan and Guangxi at higher prices. Roasting furnaces could store aluminium hydroxide for about a week. As long as the roasting operations are resumed within a week, alumina production could recover rapidly.

As this week is the last week before the CNY holiday, trading activities in the spot market will basically stagnate, which will leave alumina prices little changed. Long-distance truck transportation efficiency will decline further, with the priority being given to the shipments of long-term orders. Aluminium smelters and alumina refineries will produce normally during the holiday.

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