Yunnan demand drives China's alumina prices to one-month high

On July 20, 2023, analysts and traders said that Chinese alumina prices escalated to their highest on constraint provision in more than a month amid augmented demand from aluminium smelters in the southwestern Yunnan province.

On July 20, the Shanghai Futures Exchange witnessed a remarkable surge in the recently introduced alumina futures contract. According to Refinitiv Eikon data, the contract for the most-traded November expiry date, SAOX3, experienced a significant jump of 3.2 per cent, reaching an all-time high of RMB 2,908 per tonne.

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Xinlin Chen, the Wood Mackenzie consultant, said, “The ongoing restart of Yunnan smelters brings back China’s alumina demand. Some refineries in northern China have lowered the utilisation rates for months and have not resumed their entire operation yet. These are positive news to drive up China alumina prices in the short term.”

Analysts reported that in response to a recent increase in hydropower output, aluminium smelters in Yunnan have significantly boosted their production. This activity surge comes as power usage restrictions have been eased, allowing for greater manufacturing capacity. The raw material employed in aluminium production is alumina, also known as aluminium oxide. Aluminium, a highly versatile metal widely utilized in the transport and packaging industries, benefits from this uptick in production from the Yunnan region.