Alumina price is on rising spree, while aluminium inventory edges down: SMM learns

Along with aluminium price surge on London Metal Exchange (LME) due to US sanctions against Rusal, alumina prices are incessantly moving upward due to tight supplies and rising export margins, Shanghai Metal Market (SMM) learned.

According to Shanghai Metal Market report, the average alumina price on Monday April 23, 2018 has seen a sharp rise to RMB 3118 per tonne, against the average price of RMB 2916 per tonne on April 20 in China’s four major markets, while Australian alumina prices hovered at US$710 per tonne on Thursday, April 19, US$ 225 per tonne higher than the last Friday.

50 per cent production cut at Norsk Hydro’s Alunorte in late February due to non-compliance with bauxite deposits holds the major responsibility for the price soar. It is also disrupting aluminium production across the globe by not being able to supply sufficient alumina to the aluminium plants. Aluminio Brasileiro SA, also known as Albras, is one of the victims as it used to source all its alumina from Alunorte for producing 460,000 tonnes of aluminium annually. Now, the plant has reduced the production by half to 230,000 tonnes of aluminium each year. Norway’s aluminium smelters are also hit hard by Alunorte’s production cut.

On the other hand, relatively tight supplies and a bigger price gap between China and the overseas market are likely to increase China’s alumina exports, according to SMM. Prices of alumina are also expected to gain support from the larger margins at refined aluminium plants.

According to another update from SMM, average A00 aluminium ingot price has surged marginally from RMB 14870 per tonne to RMB 14940 per tonne on April 23, 2018. The prices are expected to range between RMB 14920 per tonne and RMB 14960 per tonne, with spot discounts to settle at RMB 70 to RMB 60 per tonne.

Refined aluminium inventory including SHFE warrants also edges down today to 2.231 million tonnes, 17000 tonnes lower as compared to 2.248 million tonnes recorded on Thursday April 19, 2018, SMM research found.

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