DAILY: Chinese alumina prices continue trending downward

China’s alumina prices in both the spot and futures markets tracked lower again on April 2. News of additional refining capacity about to be commissioned further dampened sentiment in the two markets, industry watchers noted.

On Wednesday, the average prices for alumina with a more than 98.6% purity weakened further in China's five major alumina-producing regions, with those in Henan and Shanxi provinces both dropping by Yuan 25/t ($3.4) from Tuesday to Yuan 3,045/t and Yuan 3,025/t respectively, according to Mysteel's daily price assessment.

The price in Henan had fallen for the 20th consecutive working day while in Shanxi, the price had seen the 18th consecutive on-day drop, Mysteel Global noted.

Meanwhile, the average prices under Mysteel's assessment for smelter alumina in Guizhou province and the Guangxi autonomous region both ticked lower by a smaller Yuan 10/t from April 1 to reach Yuan 3,140/t and Yuan 3,060/t respectively on April 2.

Similarly, the price in Shandong province, the country's largest alumina production base, was assessed by Mysteel at Yuan 3,020/t on Wednesday, lower by Yuan 20/t on day and recording the lowest daily average price among the five areas, Mysteel's daily tracking showed.

Expectations that new alumina production capacity would be brought onstream this quarter put further pressure on an already oversupplied market, analysts said. Mysteel learned this week that a steel and aluminum producer based in North China's Hebei is making preparations for commissioning a 1.6 million tonnes/year alumina production line in May.

As such, buyers' purchasing interest in the spot market and speculators' mood in the derivatives market both weakened, market watchers noted. Spot alumina trading was soft on April 2, with Mysteel not hearing of any deals being concluded, compared to one deal heard on April 1.

Also on Wednesday, the prices of the 12 alumina futures contracts on the Shanghai Futures Exchange (SHFE) all declined by Yuan 37-69/t during the nighttime trading session, with the most-traded contract for May delivery closing Yuan 47/t lower at Yuan 2,878/t as of 1:00 am Thursday, the lowest in over a year, according to the SHFE's data.

Written by Iris Pang, pangjunyu@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com