WEEKLY: China's spot alumina slips further under rising inventories

According to Mysteel's latest survey, total alumina stocks across the country's 10 major ports, 44 alumina producers, 89 primary aluminum smelters, and rail yards or in transit increased by 1.4% on week to 5.4 million tonnes as of January 15. This was also 43.9% higher than the year-prior level and marked a fresh record high since Mysteel began tracking the data in January 2022.

The inventory build has persisted for more than seven consecutive months since early June last year, Mysteel Global noted, and last week also marked the 12th straight week in which alumina inventories hit a new historical high.

Under the mounting inventory pressure, spot alumina prices softened further last week. Mysteel assessed the national average spot price for metallurgical-grade alumina with a purity above 98.6% at Yuan 2,670/tonne ($383/t) on January 15, down 0.9% from a week ago.

The latest on-week rise in stocks was mainly the result of early deliveries by some alumina producers under long-term contracts, according to market watchers. Producers accelerated deliveries primarily to avoid potential supply disruptions caused by logistics and transportation constraints during the over-week-long Chinese New Year holiday in mid-February. Also, they sought to reduce their own elevated inventories and free up storage capacity.

These advance shipments resulted in higher stockpiles at primary aluminum smelters as well as at rail yards or in transit. As of January 15, alumina inventories held by the 89 surveyed smelters rose by 0.8% on week to a record 3.7 million tonnes, while volumes stored at rail yards or in transit increased by 4.3% on week to 1.3 million tonnes, Mysteel's survey showed.

On the supply side, alumina production remained largely stable despite short-term maintenance stoppages at some refineries. The 44 producers monitored by Mysteel produced 1.85 million tonnes of smelter-grade alumina during January 9–15, up by 0.1% from the previous week, the survey showed.

Meanwhile, demand from downstream primary aluminum smelters also showed little change. The volume of alumina consumed by the 89 aluminum smelters surveyed ticked up another 0.2% on week to 1.65 million tonnes during the same survey week, according to Mysteel's tracking.

Written by Iris Pang, pangjunyu@mysteel.com