WEEKLY: China's alumina output drops, stocks swell to new record

The decline in output mainly reflected extended calciner suspensions in Hebei and Henan provinces triggered by ongoing air pollution alerts, as well as production adjustments in Shandong province, market sources said.

In response to air pollution warnings initially scheduled to be lifted at the end of October, two alumina producers in Henan's Luoyang and Hebei's Tangshan each halted two calciners for 3-4 days during the prior week, as reported. When the two cities issued renewed smog alerts on November 3 and 4, the suspensions were extended through last week, further curbing output.

In addition, a refiner in Shandong began a three-week maintenance check on one calciner early last week due to mounting stocks, rising sales pressure and shrinking profit margins, according to market sources. The maintenance affected around 800,000 tonnes/year of capacity.

Despite the decrease in production, alumina inventories continued to accumulate during the same week, reaching a new all-time high. Total stocks across China's ten major ports, 44 refiners, 89 smelters, and rail yards or in transit regularly tracked by Mysteel climbed to 4.8 million tonnes as of November 6, up by 56,000 tonnes or 1.2% from a week earlier, the survey results found. 

Contributing most to this accumulation was the rise in inventories at primary aluminum smelters. Mysteel's survey showed that by November 6, the volume of alumina stockpiled at the 89 sampled smelters had increased by 43,000 tonnes or 1.3% on week to 3.3 million tonnes. The increase was partly due to the recovery of transportation capacity in Shandong last week which allowed more material stored at rail yards or in transit to be transferred to smelters.

Meanwhile, alumina consumption stayed steady during the survey week. The same 89 primary aluminum smelters consumed 1.64 million tonnes of alumina last week, up marginally by 0.09% from the week before.

With inventories mounting and demand steady, alumina prices continued to weaken. Mysteel's assessment showed that the national average spot price for smelter-grade alumina with purity above 98.6% fell by 1.1% from October 30 to Yuan 2,877/tonne ($404/t) on November 6.

Written by Iris Pang, pangjunyu@mysteel.com