Domestic Alumina Prices Held Steady amid Prevailing Wait-and-See Sentiment among Aluminium Smelters

SHANGHAI, Feb 6 (SMM) - Price review: As of last Friday, the SMM weighted alumina index stood at 2,947 yuan/mt, up 2 yuan/mt from January 20, the last trading day before the CNY holiday. The prices stood between 2,870-2,960 yuan/mt in Shandong, 2,960-3,030 yuan/mt in Henan (+5 yuan/mt), 2,950-2,990 yuan/mt in Shanxi, 2,830-2,950 yuan/mt in Guangxi, 2,830-2,880 yuan/mt in Guizhou (+10 yuan/mt), and 3,000-3,050 yuan/mt in Bayuquan.

Overseas market: Alumina prices rose $10/mt from January 20 to $370/mt FOB Western Australia last Friday, equivalent to 3,049.52 yuan/mt CIF major ports in China, which was 102.52 yuan/mt higher than the domestic spot prices. The import window was closed again. On January 25, a deal for 30,000 mt of alumina was done at $408/mt FOB Brazil, for shipment in May, up $18/mt from the previous transaction on January 17.

Domestic market: While the logistics began to gradually recover in the first week after the CNY holiday, aluminium smelters relied on alumina supply under long-term orders, with little intention of making inquiries and purchases in the spot market. In terms of supply, the third production line of Hebei Wenfeng’s 4.8-million-mt-per-year alumina project was successfully put into operation at the end of January, with an annual capacity of 1.2 million mt. One alumina refinery in Guizhou was shut down in December 2022 due to power shortages, but re-opened in early February after the power supply was restored. On the demand side, aluminium smelters in Yunnan currently maintain stable operations, but were said to be at risk of renewed power rationing. The operating aluminium capacity in Yunnan was reduced to 4.04 million mt in the third quarter of last year because of the power rationing, and has been maintained at this level ever since. SMM will closely track the operations of local aluminium smelters.

The commissioning of new alumina capacity was accompanied by the restarts of idled capacity. Coupled with potential output cuts by aluminium smelters, market players are now betting on a surplus in the alumina market. Trading activities are unlikely to pick up this week amid strong wait-and-see sentiment, which will leave the prices basically flat.