WEEKLY: China's spot alumina market remains oversupplied

According to Mysteel's weekly survey, total smelter-grade alumina output among the 44 Chinese alumina refiners under Mysteel tracking ticked up marginally by 0.2% on week to 1.84 million tonnes during the December 19-25 week. 

During the same week, the average capacity utilization rate across the same 44 producers rose slightly to 85.14%, up 0.14 percentage points from the previous week. The increase stemmed from the fact that many producers maintained relatively high operating rates while engaged in price negotiations for next year's long-term contracts, market sources learned. Some talks were deadlocked, with alumina producers on the verge of losses holding firm on prices while primary aluminum smelters pushed for lower procurement prices.

Alumina inventories mounted further last week. As of December 25, total stocks across China's ten major ports, 44 refiners, 89 smelters, and rail yards or in transit under Mysteel's monitoring had increased by 1.1% from a week earlier to 5.2 million tonnes, setting a new record high since Mysteel began tracking the data in January 2022.

Behind the inventory build were mainly transportation bottlenecks caused by colder weather in North China, which constrained logistics and resulted in higher stock levels at both refiners and rail yards or in transit. By December 25, inventories held by the 44 producers had risen by 4.5% on week to 230,000 tonnes, while stockpiles at rail yards or in transit had climbed by 4.2% to 1.2 million tonnes, the survey findings showed.

Downstream demand from primary aluminum smelters remained generally steady. Total alumina consumption among the 89 smelters tracked by Mysteel reached 1.65 million tonnes during the week, inching up by a tiny 0.01% from a week earlier.

Spot alumina prices tracked lower amid the ongoing oversupply. On December 25, Mysteel assessed the national average spot price for smelter-grade alumina with a purity above 98.6% at Yuan 2,720/tonne ($388/t), down 1.4% from December 18.

The continued decline in domestic alumina prices also weighed on imported bauxite prices, a key raw material for alumina production. Mysteel's price assessments showed that the average price for seaborne gibbsite-type bauxite from Guinea had fallen by 5.7% on week to $66/dmt CIF Rizhao port on December 25. Prices for the same grade of Australian bauxite had slipped by 0.7% to $67/dmt CIF Yantai port the same day. 

Written by Iris Pang, pangjunyu@mysteel.com