SHANGHAI, Mar 14 (SMM) - Falling costs in north China will only temporarily improve alumina refineries' profitability. Against the backdrop of oversupply and diminished cost support, alumina prices will go down further. The current price difference between north and south China has created no room for cross-regional arbitrage as the freight rates between the two regions are as high as 180-220 yuan/mt. Should the price difference expand to 180-220 yuan/mt or even exceed this range, the surplus alumina in south China will be shipped to north China, which will threaten the tight balance in Shanxi and Henan and accelerate price drop in northern market.
Alumina demand in south-west China decreased significantly, while alumina refineries maintained high operating rates. The production resumptions by Bosai Group, Guanglv Group and State Power Investment Corporation will exacerbate oversupply in south-west China and weigh on local prices.
In the short term, alumina prices will be vulnerable to further decline, unless new developments occur that reverse the current oversupply. Alumina prices in south-west China will lead the decline.
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