Alumina News - General

Outlook 2017: Where is alumina headed after ending in a supply deficit in 2016?

AL Circle

Alumina enters 2017 on a positive note. Its price advance last year was ahead of other commodities in the aluminium value chain, and the growing demand from China and Middle East aluminium makers suggests that those gains may be sustained this year as well.

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 Demand-Supply & Price Outlook:

Globally, alumina prices have been improving in the latter half of 2016; over the last couple of months, the prices rose even higher as coal became costlier and alumina supply deficit became clear following Chinese output curtailments. With the world’s biggest aluminium producers firing up new plants and restarting idled capacity to take advantage of high aluminium prices, it is expected that the demand (pull factor) for alumina will rise, keeping prices buoyed up through 2017. On the supply side (push factor), however, the deficit is predicted to disappear making way for a restored balance situation.  

According to the analysts, integrated producers such as Alcoa will gain from rising alumina prices. The company’s 2017 earnings should get a boost from higher alumina prices (DBC), they predict.

News
As per the latest market updates, smelter owners in China are showing reluctance to buying spot alumina units after the prices surged  48 per cent QoQ in the last quarter of 2016. As a result, fewer alumina enquires are being generated. "The demand appetite has dimmed, if not diminished," said a trader. However, since aluminium supply does not seem to be facing any long-term headwinds, it can be expected that the demand for alumina will also pick up as the market starts recovering from the year-end liquidity crunch.

On the production side, 2016 saw many alumina refineries coming under the scanner of regional environmental protection bodies. Many plants downed their shutters while others sold off mill assets to offload mounting losses incurred due to low demand. Very recently, Alcoa Corporation also announced permanent closure of their Suralco alumina refinery and bauxite mines in Suriname; the curtailment however had started since November 2015.

In 2017, a number of companies have plans to restart their alumina refinery operations. China's Bosai Minerals Group has already resumed production at its Xianfeng alumina refinery that faced a near closure last December due to environmental factors. Some big projects are also being lined up for production starts around the end of this year.

Projects in Pipeline:

• China's Yunnan Aluminum Co., which has set an ambitious target for itself- to become 100% self-sufficient in alumina by 2020, will start working on their plans from this year onward.
• Vedanta which recently revived their second stream operations in India’s Lanjigarh refinery will up their production as soon as bauxite supply issues are solved.
• Ma’aden subsidiary has kick-started commercial production at its alumina refinery.
• Yunnan Aluminum’s large alumina project in Laos will come up in H2 2017.
• China Hongqiao Group will start selling alumina from its large-scale refinery project in Indonesia.

As per preliminary production data released by Shanghai Metals Market, China is estimated to produce 5511 thousand tonnes of alumina in January 2017, up 0.73 per cent from December. With outlook for domestic alumina demand remaining positive, major producers are expected to scale up production to leverage on the high prices.

News
Global Alumina Trade Outlook:
China being the largest consumer of alumina and bauxite is going to impact global alumina trade in 2017 rather significantly. The Asian country slashed its alumina purchases in 2016 while its exports of the mineral also halved on the back of production disruptions within the country and a somewhat dimmed demand outlook in the international market.

As per the latest market update, China imported just over 261,000 tonnes of alumina last November, marking a 32% decline in demand year-over-year. With prices of aluminium improving and more smelters going on stream in China, the demand for the mineral in both China and ex-China market is expected to look up. The U.S., for example, in 2017 (till August), is estimated to source 624074.2 tonnes of alumina from the international market with the value totalling US$265.4 million.

Middle East countries too despite being endowed with a host of advantages like availability of cheap energy lag behind other aluminium producing countries due to lack of substantial alumina and bauxite reserves within the country. But they are high on their production and expansion plans; so, they will keep importing more of the mineral to feed their scaled up smelting capacities this year.

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A Sneak Peek into the Activated Alumina and High Purity Alumina Markets:

According to a recent market research report, the global activated alumina market is slated to witness a steady growth of around 8 per cent CAGR over 2016-2020 piggybacking the growth of adsorbent market and a wide range of catalyst-based applications market all over the globe. The report says, during the forecast period, activated alumina will be used for the removal of impurities such as fluoride and arsenic from drinking water and also for the drying of liquids, air, and gasses. The processed mineral will be used in the purification and conditioning of insulating oil and industrial oils as well, as it remains fairly stable at higher temperatures.

News     Source: Altech Chemicals

Altech Chemicals forecasts global market for high purity alumina (HPA) will reach 86,831 tons by 2024 from the current estimate of 25,315 tons, registering a growth of 343 per cent. The company says the demand for 4N HPA (99.99% Al2O3) will continue to dominate the HPA market and account for 72% of HPA demand in 2024.

According to another report, the global HPA market will grow at an estimated CAGR of 27.11% during the period 2016-2020. The growing adoption of LED lighting systems and displays, changing Government regulations encouraging energy-efficient lighting systems across economies, and increase in demand from APAC will drive the mineral market growth through 2020.

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