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03 JANUARY 2017 AL CIRCLE

Alumina and LME aluminium price divergence to continue in 2017

EDITED BY : DIPANWITA GUPTA 2MINS READ

Global alumina prices have risen steadily since late September in 2016 on the back of raw material restocking by the smelters in China where the commodity prices in the domestic market have also witnessed a steep rise, driven by strong demand, refinery closures (on alleged environmental laws incompliance) and limited transportation availability.

Region-wise alumina prices and LME aluminium have continued to diverge through 2016, leaving some smelter owners reluctant to lock in their raw material costs against the LME aluminium price. The divergence has been such that the alumina market has grown independent of that of aluminium over the course of past one year.

News
Alumina prices globally, including in China, experienced a steep rally in the fourth quarter of 2016 after a wave of smelter restocking in China. However, there seems to be a lull setting in for the negotiations for 2017 alumina contracts. With prices for the key raw material for aluminium smelting in December 2016 up 48 per cent since October, contract negotiations for the New Year are being delayed.

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According to reliable industry sources, market participants are expecting greater 2017 contract volumes of alumina will be linked to the benchmark indices, or settled on the basis of spot prices, instead of divulging their raw material requirements to the rigidity provided by LME-linked contracts.  


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EDITED BY : DIPANWITA GUPTA 2MINS READ

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