China alumina prices firm as stock levels dip, metal prices rise

Chinese spot alumina prices firmed further Monday on the back of stronger domestic aluminum prices and reduced alumina reserves following refinery cutbacks in recent months. Platts ex-works Shanxi alumina spot price stood at Yuan 1,710/mt ($262/mt) full cash payment terms Monday, rising Yuan 15 from Friday, and up Yuan 65 on the week. The current price also reflected an increase of Yuan 85 from a month ago.

The front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 11,145 mt Monday, up from Yuan 10,780/mt a week ago, and also from Yuan 10,830/mt a month ago.

Spot alumina offers in Shanxi were heard at Yuan 1,730-1,750/mt cash Monday, up from Yuan 1,720-1,730/mt on Friday, and mostly around Yuan 1,700/mt at the start of last week. Tradeable prices were pegged at Yuan 1,700-1,720/mt, buyers and sellers agreed.

“Available stocks are very limited in Shanxi and Henan now, so that’s the main support for alumina,” a Henan smelter source said. “Domestic ingot prices are also higher, so there’s more confidence overall as well.”

In Henan province, tradeable ex-works alumina prices were indicated at Yuan 1,750-1,800/mt cash to partial credit terms Monday, up from Yuan 1,700-1,750/mt last week.

“Offers are high, trades are few, and general expectation is that prices will still test higher,” a Beijing trader said. “But the economy is still weak, so not sure if the higher prices can sustain. We must wait and see.”

In Guangxi in the south, spot alumina offers were pegged around Yuan 1,650/mt cash, with tradeable prices indicated around Yuan 1,600/mt, though no trades have been reported.

Chinese alumina prices in Shanxi and Henan are expected to rise further to Yuan 1,800-1,850/mt cash in March-April, sources said. But the levels may fall back in the second quarter on the back of increased supply as many refiners who had idled capacity earlier are expected to resume production, sources said.