Alumina output to lower in China on environmental initiative and production lines maintenance

According to the latest update by Shanghai Metals Market, alumina production in Lvliang of Shanxi province is likely to be affected as the area was highlighted in China’s three-year initiative to “make skies blue again”. This initiative was released by the State Council on June 3, 2018, with an aim to reduce levels of PM2.5 in three years, lower the number of heavy-polluted days and improve air quality.  

From Beijing-Tianjin-Hebei region, the key focus areas of this initiative will further expand to include some of the surrounding cities like Jinzhong, Yuncheng, Linfen, and Lvliang in Shanxi province, Luoyang and Sanmenxia in Henan province, and Xi'an and Tongchuan in Shaanxi province.

Primary aluminium is also a targeted sector for this initiative, thereby, likely to face some impact on the new, 300,000-mt-per-year aluminium smelter Meixin Aluminium in Tongchuan of Shaanxi, SMM believed.

Another thing to watch is whether the control over coal consumption would be able to push the costs of production up for both aluminium and alumina.

The initiative is also enforcing regulations on open-cut bauxite mining. As a result, bauxite prices are expected to gain further in the near term. According to SMM, Shanxi and Henan are the two provinces where bauxite mines largely adopt opencast mining.

Apart from this initiative, maintenance at some of the alumina refineries in Chinese provinces is likely to cut the alumina output. For instance, nearly 28,000 tonnes of alumina production is expected to be affected in Jiaokou county of Shanxi as a local producer there carried out maintenance from June 23 to July 10, according to the update by SMM

Tianyuan Chemicals in Xiaoyi City, Shanxi also began maintenance on its production lines on Thursday, July 5, which is expected to impact less than 10,000 tonnes of alumina production.

Alumina spot price, on the other hand, slightly rose today, on July 6, from RMB 2728 per tonne, as of July 5, to RMB 2740 per tonne, according to SMM. The average price is expected to be hovered at RMB 2740 per tonne, as well.

In the east, the alumina spot price grew from RMB 2740 per tonne, as of July 5, to RMB 2750 per tonne on July 6, while in the north and south, the prices increased from RMB 2715 per tonne to RMB 2735 per tonne and from RMB 2660 per tonne to RMB 2685 per tonne, respectively. However, the alumina spot price in Central had been showing no change since June 27 until now at RMB 2765 per tonne, after a fall on June 26 from RMB 2790 per tonne to RMB 2765 per tonne.