WEEKLY: China's spot alumina prices hold steady, despite stock build-up

According to Mysteel's price assessment, the national average price for smelter-grade alumina with purity exceeding 98.6% slid by a marginal 0.2% from a week earlier to Yuan 3,262/tonne ($454/t) as of August 14.

During the same period, China's alumina inventories continued to mount. Mysteel's latest survey showed that total alumina stocks at the ten major Chinese ports, 44 alumina refiners, 89 primary aluminum smelters, and rail yards or in transit had increased by 1.3% from August 7 to reach 4.2 million tonnes by August 14, the highest level in 14 months.

The climb in stocks was primarily led by smelters, whose alumina inventories climbed by 1.6% on week to 3 million tonnes, according to the survey.

Despite the mounting inventories, spot alumina prices faced only limited downward pressure last week. Restricted availability in the spot market was mainly behind the price resilience, according to market insiders.

On the one hand, to generate receipts last week, some alumina producers redirected spot cargoes to delivery warehouses registered with the Shanghai Futures Exchange (SHFE), which reduced the volume of spot alumina circulating in the spot market. The SHFE's data showed that alumina receipts at its registered warehouses had surged by 135.3% on week to 51,671 tonnes by August 14.

In addition, some producers focused on fulfilling long-term contracts amid stable alumina demand from primary smelters, with the recent growth in resumption-driven output of alumina mostly absorbed by smelters to build up their raw material inventories, market sources suggested. 

On the production side, alumina output among the 44 refiners sampled in the survey totalled 1.85 million tonnes during August 8-14, down by 0.1% from the prior week. This marked the first production decline in nearly two months, reflecting generally stable operations at most alumina producers, with few reports of makers either lifting or lowering output.

Specifically, one 2.4 million tonnes/year refiner in Jiaokou county, Shanxi province had cut its production by around 1,500 tonnes/day for about two weeks, as reported.