Antaike projects a surplus alumina market in 2020; prices to hover around US$ 342-413/t

As presented by Huo Yunbo, senior analyst with Chinese consultancy Antaike during Aluminum Week in Qingdao, China’s alumina production will increase to 74.35 million tonne by 2020 with new operations coming online, leading to a surplus of 730,000 tonne putting pressure on price. She projected domestic alumina prices to hover around RMB 2,400-2,900 per tonne (US$342-413/t) in 2020.

About 4.7 million new alumina capacity will be added in 2020 with about 1.8 million t/year of delayed new capacity coming on stream by 2020.

According to her, with substantial primary aluminium capacity coming on stream before the aluminium capacity reaching the peak of 45 million tonne per year, there was room for alumina demand to pick up.  Production cuts and delayed commissioning of new projects have kept alumina output in check in 2019 and demand was slow because of declining primary aluminium output. Chinese alumina market, which is in balance this year is likely to go into surplus in 2020.

She projected 2019 alumina output to reach 71.59 million tonne, down 0.3% YoY with a surplus of around 400,000 tonne. Alumina capacity is projected to increase by 3.8 million tonne YoY to touch 87.15 million tonne in 2019.

She projected domestic alumina capacity to increase with capacities relocating to Southwest regions, closer to bauxite resources. This combined with the inflow of low-cost seaborne alumina may add more pressure to domestic supply.

However, she expects China’s alumina capacity to increase slowly given primary aluminium capacity is unable to breach 45 million tpy.

Alumina production costs are expected to drop as there will be abundant supply of bauxite with more bauxite coming from new bauxite projects in Guinea. This will make imported bauxite prices competitive while relieving supply tensions in the domestic market.