WEEKLY: China's alumina prices soften further, inventories hit new high

Mysteel assessed the national average spot price for metallurgical-grade alumina with purity above 98.6% at Yuan 2,851/tonne ($403/t) on November 27, marking a marginal 0.3% drop from a week earlier.

During the same week, alumina stocks reached another all-time high. According to Mysteel's latest survey, as of November 27 total alumina inventories across ten major Chinese ports, 44 alumina producers, 89 primary aluminum smelters, and rail yards or in transit had increased for the 26th consecutive week to 4.94 million tonnes, rising by 1.2% on week and renewing the highest level since the survey began in January 2022.

Contributing most to the continued accumulation were the growing stocks at primary aluminum smelters and at rail yards or in transit. By November 27, inventories at the 89 surveyed smelters had risen by 52,000 tonnes on week to 3.45 million tonnes, while stocks at rail yards or in transit had increased by 26,000 tonnes to 1.12 million tonnes. This marked the highest volume at rail yards or in transit since early 2022 and the third straight week of record-high smelter inventories, Mysteel Global noted.

Some smelters, concerned about potential supply disruptions caused by transportation, environmental, or weather-related factors, recently increased the floating volume of their long-term orders with alumina producers and accelerated product collection, market sources learned. These actions contributed to the stock build-up at both smelters and rail yards.

Moreover, port inventories also inched up last week following the arrival of a vessel at a southern port carrying alumina from Vietnam. Mysteel's data showed stockpiles at China's ten major ports rose by 1,000 tonnes from the previous week to 141,000 tonnes as of November 27, with Fangchenggang port in Southwest China's Guangxi autonomous region posting the sharpest on-week increase.

On the supply side, although some alumina refiners remained torn between maintaining output and scaling back production amid weak alumina prices, overall alumina output stayed stable during the survey week. Production among the 44 surveyed alumina refiners edged up by 0.7% from a week earlier to 1.86 million tonnes over November 21-27, the highest in five weeks.

Most refiners chose to keep run-rates steady. On the one hand, they expect prices of imported Guinean bauxite, a key input for alumina production, to fall and operational pressure to ease in the near term as the rainy season in the West African country has ended. On the other hand, as they are obligated to fulfil long-term supply contracts with primary aluminum smelters, this should see operating rates remain steady.

On the demand side, alumina consumption also changed little last week. Usage of alumina by the 89 primary aluminum smelters tracked by Mysteel edged up by just 0.1% from the prior week to 1.64 million tonnes, the survey found. 

Written by Iris Pang, pangjunyu@mysteel.com