WEEKLY: China's alumina stocks reach new high, output remains stable

China's alumina inventories mounted further during the November 14-20 week, with stocks as of November 20 refreshing a new all-time record high, as they have for the past four weeks, Mysteel data show. But despite the persistent supply surplus, production of the raw material remained largely stable last week, as most producers had to maintain normal operations to meet term contract obligations and secure opportunities to conclude new contracts.

According to Mysteel's survey, total alumina stocks across the ten major Chinese ports, 44 alumina producers, 89 primary aluminum smelters, and rail yards or in transit monitored by Mysteel increased for the 25th consecutive week to 4.88 million tonnes as of November 20, up by a tiny 0.9% from the previous week but still making for the highest stock level since the survey began in January 2022.

The rise was mainly driven by growing inventories at rail yards and at primary aluminum smelters, market watchers noted. By November 20, stockpiles at rail facilities and the 89 surveyed smelters had climbed by 3.5% and 1% on week to 1.1 million tonnes and 3.4 million tonnes respectively. This marked the second consecutive week in which smelters' inventories had reached a new record high, Mysteel Global noted.

Many smelters continued to procure spot alumina at lower prices as part of a cost-control strategy, aiming to secure margins and mitigate the potential risk of supply interruptions from winter logistics or environmental issues, market sources explained.

On the other hand, alumina demand remained relatively steady. Consumption by the 89 primary aluminum smelters Mysteel tracks edged up by another 0.04% on week to 1.64 million tonnes during the same week.

Although the domestic alumina market remained in surplus, output reductions were minimal. Most refiners continued operating steadily to meet long-term contractual commitments and maintain their market share. Mysteel's survey showed that the 44 surveyed producers produced 1.85 million tonnes over November 14-20, a slight rise of 0.1% from the prior week.

Rising inventories and sustained production continued to weigh on spot alumina prices last week. Mysteel assessed the national average spot price for metallurgical-grade alumina with purity above 98.6% at Yuan 2,860/tonne ($404/t) on November 20, down by a marginal by 0.2% on week and the lowest price level since late July 2023.

Written by Iris Pang, pangjunyu@mysteel.com

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