DAILY: China's alumina prices continue dropping, trading subdued

Chinese prices for spot and futures alumina kept moving downward on March 27. Meanwhile, alumina trading in the domestic market was also subdued, as higher alumina inventories on both the buying and selling sides this week kept weighing on spot demand.

On Thursday, the average prices for alumina with a more than 98.6% purity in China's five major alumina production bases all tracked lower. Notably, the alumina price in Shanxi under Mysteel's assessment slipped by Yuan 40/tonne ($5.5/t) on day to Yuan 3,095/t, marking its 14th consecutive working day of decline.

In parallel, the alumina prices in Henan and Shandong provinces both decreased by Yuan 30/t on day to reach Yuan 3,115/t and Yuan 3,080/t respectively, and those in Guizhou province and Guangxi autonomous region dipped Yuan 20/t to Yuan 3,240/t and Yuan 3,140/t.

The 25% tariff on all imported cars to the U.S. Trump announced on Wednesday added pressure on future demand expectations for aluminum, one of the most commonly used metals in the automotive industry, and alumina, a key raw material for the production of aluminum, a market analyst noted.

In consequence, sentiment in the alumina futures market waned on Thursday, with alumina futures contracts on the Shanghai Futures Exchange (SHFE) edging down by Yuan 9-27/t during the nighttime trading session. The price of the most-traded contract for May delivery closed Yuan 23/t lower at Yuan 3,049/t as of 1:00 am Friday, according to the SHFE's data.

Meanwhile, rising stockpiles this week at some Chinese alumina producers and primary aluminum smelters reduced appetite for spot alumina purchases. Mysteel's latest survey showed that the alumina inventories held by the 44 producers and 89 smelters under Mysteel's tracking rose to 140,000 tonnes and 2.92 million tonnes respectively as of March 27, higher by 16.7% and 0.97% on week.

Consequently, spot alumina trading in the domestic market was thin on Thursday, with Mysteel not hearing any deals being concluded, though three deals concluded in the overseas market on Wednesday - two 30,000-tonne consignments at $368/t and $375/t FOB Eastern Australia, and one 20,000-tonne lot at $413/t FOB Brazil.

Written by Iris Pang, pangjunyu@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com