The Economic Times
Alumina price expected to remain high in the near term
Edited by : AL CIRCLE
2 min read
Rio Tinto recently announced that it would not shut down its 2.75 million tonne (MT) Gove alumina refinery. The company clarified that it will be receiving energy assistance from the government of the country. The move could lead to a slowdown in the recent increase in alumina prices. However, various factors still point towards a higher alumina price in the medium to long term.
Restrictions on bauxite exports by Indonesia- the mineral rich country restricted the exports of bauxite to entice foreign entities to set up facilities in the country. The country was a major supplier of bauxite ore for the aluminium companies throughout the world. This could lead to an increase in demand for alumina from the companies deprived of bauxite ore.
Bureaucracy in India- new facilities are being established in India as companies see a healthy growth in automobiles and consumer durable segments. However, much of the investments have been done in the downstream processes involving aluminium smelters and conversion units. Various issues such as land acquisition, environmental clearance and other political issues have constantly marred the grant of mining approvals.
High demand from China- With quality of Chinese alumina deteriorating, demand for high quality alumina has been on the rise in the past few years. Chinese aluminium players are expected to blend domestic low grade alumina with the high quality imported alumina.
Issues in supply- Major alumina-rich countries such as Jamaica and Guinea have been facing labour, energy and other cost problems. Supplies from Australia and Brazil are, however, expected to be freed to a certain extent as the smelting units in the countries are closing down due to cost pressures.
The prices of alumina have already risen by around $20 per tonne since the beginning of the year. Analysts expect prices to move upto $375 per tonne in next 4-5 months. In the medium to long term, prices could move further up to the levels of $400-420 per tonne.
Restrictions on bauxite exports by Indonesia- the mineral rich country restricted the exports of bauxite to entice foreign entities to set up facilities in the country. The country was a major supplier of bauxite ore for the aluminium companies throughout the world. This could lead to an increase in demand for alumina from the companies deprived of bauxite ore.
Bureaucracy in India- new facilities are being established in India as companies see a healthy growth in automobiles and consumer durable segments. However, much of the investments have been done in the downstream processes involving aluminium smelters and conversion units. Various issues such as land acquisition, environmental clearance and other political issues have constantly marred the grant of mining approvals.
High demand from China- With quality of Chinese alumina deteriorating, demand for high quality alumina has been on the rise in the past few years. Chinese aluminium players are expected to blend domestic low grade alumina with the high quality imported alumina.
Issues in supply- Major alumina-rich countries such as Jamaica and Guinea have been facing labour, energy and other cost problems. Supplies from Australia and Brazil are, however, expected to be freed to a certain extent as the smelting units in the countries are closing down due to cost pressures.
The prices of alumina have already risen by around $20 per tonne since the beginning of the year. Analysts expect prices to move upto $375 per tonne in next 4-5 months. In the medium to long term, prices could move further up to the levels of $400-420 per tonne.
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