Spot alumina price may rally before Chinese New Year on good demand from smelters

Spot alumina price in China is struggling to stay afloat in the face of slow demand. Today’s average alumina price stands at RMB 2875 per tonne and expected to move within a range of RMB 2875 – 2875 per tonne today. SMM forecasts alumina prices are likely to rally ahead of the Chinese New Year holiday in mid-February to just below RMB 3,000 per tonne before downward pressure returns. The average price of Chinese domestic alumina in four major regions stood at RMB 2,850 per tonne earlier this month, down 23.6% from RMB 3,730 tonne in November, according to SMM data. Chalco Alumina and imported alumina prices remain unchanged today. The price trend in the domestic markets can be seen in the following table:

Shandong Weiqiao has started to execute its long-term contracts since the beginning of this year, loosing pressure on alumina inventory. Traders in Shanxi also reported lower alumina stock while alumina producers in the region raised their offers.

Aluminium producers in northwest China have also placed enquiries for alumina in past weeks as they started restocking alumina. Smelters are keen on restocking the alumina before the prices go up.  In the south, Guangxi Huayin Aluminium is set to see its monthly alumina production going down 80,000 tonne due to short supply of raw materials. All these may raise the prices in the short term.

The drop in alumina price was mainly led by a slump in aluminium ingot price, sellers’ willingness to shell out stock at a lower price as it was drawing good profits because of falling bauxite and caustic soda prices and hence, lower production costs.