China alumina imports rise 31.76% YoY in Jan; no plans to restart idled capacity

China imported 507,500 mt of alumina in January 2016, up 31.76 per cent year-on-year, but down 6.72 per cent month-on-month, revealed data released by the China Customs.

Alumina prices overseas were depressed during December 2015 and January 2016, boosting Chinese buyers’ interest in imported alumina. Chinese alumina producers cut production during November and December 2015, also turning some buyers to imported alumina. Alumina capacity cuts in China have amounted to 4.4 million-tpy so far this year, including capacity being cut, SMM statistics showed.

Idled alumina capacity in China is unlikely to come back online on a large scale, despite recent price rise, SMM expects; the reason being that current prices are not attractive enough. Alumina producers in southwest China are still struggling around cash costs. Producers in north China that cut or halted production earlier, whose costs are relatively high due to reliance on bauxite sourced from other parts of the country, are still operating at a loss.

Prices for domestic alumina saw big gains after entering February, driving prices for imported alumina up as well. FOB offers of West Australian alumina have been raised to around USD 232/mt, leaving import cost at RMB 1,900/mt for Chinese importers. There is still room for profit for Chinese importers since alumina at the Port of Lianyungang was offered higher at RMB 1,950/mt (self pickup). As such, China’s alumina imports are expected to increase in the future.