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09 JANUARY 2019 AL CIRCLE

Chinese authorities express concerns about excessive production capacity of alumina: SMM

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

According to a report by Shanghai Metals Market, Chinese authorities had raised concerns about the possibility of excessive production capacity across the alumina industry in China at the end of last year. They had even cited the projects which were in the pipeline.

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The news came based on the Notice of Promoting Orderly Development of Alumina Industry issued jointly by The National Development and Reform Commission and the Ministry of Industry and Information Technology on December 28, in a bid to control blind expansion and lower the risks of overcapacity.

The notice published that many domestic firms commenced new alumina projects or planned to start new projects just for the growing price of alumina last year. Factors like Rusal sanctions, the partial closure of Norsk Hydro’s Alunorte alumina refinery in Brazil, output addition at aluminium plants in North America and Europe, the strike at Alcoa’s Western Australia operations had contributed to the alumina price rise in 2018.

China’s total alumina production in 2018 had recorded at about 70.31 million tonnes, which is nearly triple the 24.38 million tonnes in 2009, SMM data showed. The alumina capacity reportedly expanded some 5.43 million tonnes in 2018, after growing 6.8 million tonnes in 2017.

However, after the being on the rising spree, alumina prices started tumbling in the fourth quarter of 2018, primarily attributing to the agreement between Hydro and Brazilian authorities, the end of Alcoa strike, looser winter curbs in China, supply cuts across Chinese aluminium producers and a closed export arbitrage window etc.

SMM assessments showed that prices of alumina stood at RMB 2,928 per tonne as of January 7, down close to 12 per cent from the 2018 peak of RMB 3,321 per tonne.

SMM expects further downside room for alumina prices until supply tightness overseas likely strengthens the prices.  But the peak of 2019 is unlikely to exceed RMB 3,300 per tonne, as per the forecast of SMM.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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