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19 FEBRUARY 2020 AL CIRCLE

SMM estimates alumina prices to continue growing in the near term

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

According to Shanghai Metals Market survey, alumina prices are likely to extend growth in the near term, as production cut in refineries is increasing, and so is the imbalance between demand and supply on the continued virus impact.

SMM estimates alumina prices to continue growing in the near term

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The amount of capacity cut at Chinese alumina refineries due to the coronavirus outbreak has increased to 4.6 million tonnes per year. Thus, the domestic alumina capacity in operation has reduced to 62.21 million tonnes per year, as of February 18, found SMM. In Shanxi, about 3.8 million tonnes per year of capacity has been reduced, while that in Henan 200,000 tonnes per year.

The shortage of domestic bauxite and coal gas has also been responsible for the alumina production cut. An alumina refinery in Xiaoyi at Shanxi province has scaled back operations and kept only a line of 1.2 million tonnes per year of capacity, as of Wednesday morning, February 18, due to the limited supply of domestic bauxite and coal gas.

According to SMM observation, refineries in north China that transport feedstock by the railroad are able to maintain stable operations with inventories of raw materials at normal levels. But refineries that rely on motor transport and supply feedstock from privately operated mines have to cut production or have to suspend because of diminishing raw materials stocks.

Global Aluminium Industry Outlook 2020

In southwest China, on the other hand, alumina refineries are being barely affected by the virus, as authorities in Guizhou have removed transportation curbs between cities, counties, and villages, and allowed production and shipments from local alumina refineries stay normal.

As far as the demand is concerned, many aluminium smelters are struggling with falling inventories of alumina. Some smelters have even turned to the overseas market and made enquiries actively, SMM learned.

As of February 18, traded prices of alumina stood at as high as RMB 2,520-2,540 per tonne in Shanxi. In Henan, meanwhile, prices remained muted, as alumina producers held back cargoes from the market.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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