On the supply side, China's alumina operating capacity rose above 98MTPA last week. Despite shrinking margins in the alumina sector, no cost-driven cuts or plans have been heard. Besides, according to Mysteel's tracking, China's alumina imports are expected to see a significant rise in October, which will put more pressure on the supply side.
On the demand side, China's aluminium operating capacity and weekly production stopped rising last week with the first section of a relocation project in Yunnan being fully commissioned, and it's expected that China's aluminium production growth in Q4 will be very limited, which will not provide much support for alumina prices. On the cost side, seaborne bauxite prices moved down further last week, weakening the support to alumina prices on the cost side. We expect a further decline in seaborne bauxite prices in Q4 due to the downward trajectory of alumina prices and the expectations of rising supply from Guinea after the wet season.
As of Oct 10, Mysteel daily assessments for Shanxi spot alumina were RMB 2,900-2,930 per tonne, EXW and including VAT, down RMB 25 per tonne from the last trading day before the National Day holiday, and assessments for Guangxi spot cargo were RMB 3,100-3,150 per tonne, down RMB 10 per tonne from the previous week. SHFE most-traded contract closed at RMB 2,856 per tonne, down RMB 12 per tonne on the week. We expect China's spot alumina prices to slip to RMB 2,850-3,050 per tonne in the short term amid oversupply.
Also Read: China's alumina operating capacity set to fall in October as prices squeeze margins
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