WEEKLY: China's spot alumina prices soften further after holidays

According to Mysteel's latest survey, the 44 Chinese alumina producers regularly monitored by Mysteel produced a total of 1.9 million tonnes of metallurgical-grade alumina during the week of October 3-9, up by a marginal 0.2% from the previous week. Domestic alumina output remained largely stable during the holiday break, with most producers maintaining normal operations, the survey found.

Although average profit margins among the 44 surveyed refiners fell sharply by 14.5% on week to Yuan 135.4/tonne ($19/t) during the survey week, many producers were generally cautious about scaling back production during the holiday as the year-end signing period for long-term alumina supply contracts was approaching, Mysteel Global learned.

On the demand side, alumina consumption was subdued during the break. Some primary aluminum smelters had built up sufficient feedstock inventories in advance and thus reduced spot procurement. In addition, some alumina shipments accumulated at rail yards due to logistical restrictions and slower transport operations over the break, according to market sources.

As a consequence, total alumina stocks at China's ten major ports, 44 refiners, 89 smelters, as well as stockpiles at rail yards or in transit under Mysteel's tracking, rose by 39,000 tonnes or 0.9% on week to reach 4.6 million tonnes as of October 9. The survey showed that the inventories at both smelters and rail yards each increased by 13,000 tonnes over the week.

With stable production, tepid demand, and mounting inventories, alumina prices came under further pressure last week. According to Mysteel's daily price assessment, the national average spot price for smelter-grade alumina with purity above 98.6% stood at Yuan 3,002/t on October 9, down by Yuan 8/t from the last working day before the holiday.

Written by Iris Pang, pangjunyu@mysteel.com