Chinese alumina market participants worried about supply disruption if caused by Hydro’s Alunorte production cut

On Tuesday, June 23, Chinese alumina market participants reported that they are keeping a close eye to Hydro’s recent power outage in Brazil to determine if the incident would cause a long-term alumina supply disruption.

“Although it might impact only around 100,000 tonnes of alumina supply to the world, we are still uncertain as to whether [the Paragomias bauxite mine] will be back on time, especially when the Covid-19 outbreak is so serious in Brazil now,” said an alumina trader in Beijing.

Hydro announced on Monday, June 22, that its production at Paragominas bauxite mine in the state of Pará in northern Brazil is at a temporary halt due to power outage as three power transmission towers overturned on Saturday, June 20.

Since the Paragominas mine supplies bauxite to Alunorte alumina refinery in Barcarena, the production halt has resulted in Alunorte’s 50 to 70 per cent cut of the total output capacity to balance the bauxite ore inventories. The production cut at Alunorte is expected to cause a reduction of around 100,000 tonnes of alumina supply to the market.

China, the world’s leading aluminium producer, who is currently banking on imported alumina due to its lower price than the domestic ore, is thus watching Hydro’s power outage closely.

China, in March 2020, imported 338,600 tonnes of alumina, which was 1147.10 per cent higher than the imports in the same period last year, according to China customs data.

In the first three months of the year (January-March), China’s total volume of alumina imports amounted to 1.029 million tonnes, up 546.34 per cent from the corresponding period last year.