Alumina plants back in action with resumption of natural gas supply, spot alumina prices continue to stay low

SMM forecasts alumina prices are likely to rally ahead of the Chinese New Year holiday in mid-February before downward pressure returns. Currently, spot alumina price in China is struggling to stay afloat in the face of slow demand. Today’s average alumina price stands at RMB 2862 per tonne, slightly down from last closing. The average price of Chinese domestic alumina in four major regions stood at RMB 2,850 per tonne. A drop in the price in South China market has driven the average price drop. Chalco Alumina and imported alumina prices remain unchanged today. The price trend in last one month can be seen in the following graph:

According to an SMM update, roasting operations have resumed at alumina plants in Henan, Shanxi and Inner Mongolia provinces. The refineries were affected by natural gas shortage last month. A total of 1.86 million tonnes of annual alumina capacity across seven alumina plants have been affected since December 2017 because of the shortage. Henan and Shanxi started to use natural gas to supply heating instead of coal gas for the first time in 2017.

The natural gas shortage affected the roasting process; however, the intermediate product aluminium hydroxide was in normal production. With the resumption of natural gas supply, the roasting process has resumed and conversion process of aluminium hydroxide into alumina will come to normal.

The drop in alumina price was mainly led by a slump in aluminium ingot price and sellers’ willingness to shell out stock at a lower price. Sellers were drawing good profits because of falling bauxite and caustic soda prices and hence, lower production costs.