Asia Pacific region's alumina weakened by unplaced cargoes

Platts alumina price benchmark closed Thursday at $378.50/mt FOB Australia, dropping $1.50/mt on Wednesday from unplaced cargoes.

A consumer reported receiving an unsolicited offer at below $380/mt FOB Australia, for shipment in the second-half of August, for which it was likely to turn away.

A trader reported seeing August buying interest at $377/mt FOB Australia, to which it was aiming to sell at $380-381/mt.

The $377/mt buy rate would be the most competitive to date. Other buy indications have been seen at $365-375/mt FOB Australia.

Rio Tinto warned Thursday that the floods in Queensland, Australia between December 2010 and April 2011 would continue to have an impact on RTA's output and costs into the second half of 2011, although on a smaller scale than Q1.

The floods caused steep cutbacks in alumina production, and increased costs in bauxite mining, refining and power generation during Q1. Rio Tinto's Q2 production report indicated that Queensland Alumina Ltd, in which RTA has an 80% share, produced 845,000 mt of alumina in Q2, compared with 987,000 mt in Q2 2010 and 745,000 mt in Q1 2011.

"Alumina production is gradually recovering from the abnormally heavy rains between December 2010 and April 2011, which primarily impacted Queensland Alumina's production, affecting bauxite and coal quality, equipment reliability and freight costs," Rio Tinto said.

A source close to QAL's plant operations told Platts earlier that the refinery was expected to operate at its full 3.95 million mt/year nameplate capacity in October.

China's domestic spot market was rangebound at Yuan 2,750/mt ($425/mt) ex-works Henan. Sources said the majority of July spot trades have been concluded and participants were awaiting fresh direction for August.

"There are many uncertain factors that can affect the market now and everyone is just watching and waiting," a South China smelter source said, citing possible power supply issues, expected new alumina and aluminum capacities, as well as talks of another round of bank interest rate increase.

"Most smelters won't want to stock up much reserves now as the market is still very volatile. Funds are also quite tight so we are not buying much spot either or keeping much reserves either," a Henan smelter source added. Refiners and smelters sources said there's been no production impact seen from power issues yet, but as July and August are the peak consumption periods, "something may still happen."
Recent market talk has also been rife about new alumina and aluminum capacities expected later this year, though there's been no confirmed startups as yet. --Joanna Lim, joanna_lim@platts.com --Yuencheng Mok, yuencheng_mok@platts.com