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Trafigura predicts overcapacity for alumina market in near future
Edited by : AL CIRCLE
1 min read
The alumina market which has been in structural overcapacity since 2007 will stay this way for the foreseeable future, Trafigura’s head of non-ferrous and bulk commodities Simon Collins said in the trading company’s first publically available report.
A general lack of volatility restricted trading opportunities during the year, he said adding that the overcapacity will continue to keep the market challenging for some time.
“Oversupply drove down domestic prices in China and alumina imports fell by more than a third. The alumina desk faced tough conditions in 2013 , trading over two million tonnes during the year,” Collins said.
China, accounts for 50% of global alumina production, but with the expansion in smelting capacity in the country China remains a net importer of alumina.
The alumina market has undergone big structural change in past three years and “producers now price longer-term contracts off an agreed index based on the spot market at the time of delivery, rather than as a percentage of the aluminium price.”
This change has shifted price risk exposure from alumina producers to smelters, he added.
A general lack of volatility restricted trading opportunities during the year, he said adding that the overcapacity will continue to keep the market challenging for some time.
“Oversupply drove down domestic prices in China and alumina imports fell by more than a third. The alumina desk faced tough conditions in 2013 , trading over two million tonnes during the year,” Collins said.
China, accounts for 50% of global alumina production, but with the expansion in smelting capacity in the country China remains a net importer of alumina.
The alumina market has undergone big structural change in past three years and “producers now price longer-term contracts off an agreed index based on the spot market at the time of delivery, rather than as a percentage of the aluminium price.”
This change has shifted price risk exposure from alumina producers to smelters, he added.
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