WEEKLY: Chinese alumina prices extend decline as supply surplus deepens

According to Mysteel's latest survey, total smelter-grade alumina output among the 44 Chinese alumina producers regularly tracked by Mysteel reached 1.9 million tonnes during October 10-16, edging up by 0.1% from the previous week.

Production levels remained largely unchanged for most refiners during the week, as they maintained steady operations to secure long-term supply contracts that are usually signed during the fourth quarter and showed little intention to cut production, market watchers said.

During the same survey week, alumina consumption by downstream primary aluminum smelters also stayed largely stable. Mysteel's survey showed that the 89 smelters it monitors consumed around 1.6 million tonnes of alumina over October 10-16, unchanged from the prior week, reflecting a lack of growth in incremental demand.

Meanwhile, alumina inventories continued to accumulate during the survey week. As of October 16, total stocks across China's 10 major ports, 44 refiners, 89 smelters, and at rail yards or in transit under Mysteel's tracking increased by 1.4% on week to 4.64 million tonnes, touching the highest level in three years, Mysteel's survey found. The inventories have now increased for more than four consecutive months, Mysteel Global noted.

The stockpiling was mainly recorded at ports and in transit. According to the survey, alumina stocks at China's ten major ports climbed by 29,000 tonnes on week, while those at rail yards or in transit rose by 23,000 tonnes. The rising stocks were the result of the arrival of a carrier loaded with imported alumina at the Bayuquan port in Northeast China's Liaoning province, as well as improved rail transport capacity in East China's Shandong province, which boosted the volume of material in transit.

Coupled with stable production and demand, the mounting inventories weighed down alumina prices in the spot market. Mysteel assessed the national average spot price for smelter-grade alumina with purity above 98.6% at Yuan 2,961/tonne ($416/t) on October 16, down by Yuan 41/t or 1.4% from a week ago.

Written by Iris Pang, pangjunyu@mysteel.com