WEEKLY: China's alumina stocks climb to new high on import arrivals, rail congestion

China's alumina inventories rose to a new high during the March 13-19 week, mainly driven by increased arrivals of imported material and growing stockpiles at rail yards, Mysteel's weekly survey found.

Total alumina stocks across the country's 10 major ports, 44 alumina producers, 89 primary aluminum smelters, and rail yards or in transit tracked by Mysteel reached a record 5.83 million tonnes as of March 19, up 1.1% from a week earlier, according to Mysteel's survey.

The on-week increase was largely the result of continued inflows of imported alumina. Some cargoes originally destined for Middle Eastern countries via the Strait of Hormuz were rerouted to Chinese ports amid ongoing regional tensions that have disrupted shipping through the strait, market sources said.

Mysteel's survey showed that alumina stocks at the 10 major ports it monitors had jumped by 12.6% on week to 358,000 tonnes by March 19. The sharpest increases were recorded at Panjin and Bayuquan ports in Northeast China's Liaoning province, where alumina inventories surged by 65% and 30% on week respectively.

In addition to rising portside stocks, swelling stockpiles at rail yards also contributed to the overall build-up. Following the escalation of Middle East tensions, higher oil prices have increased demand for rail transport while reducing demand for road transport, as rail freight costs are relatively less sensitive to fuel price fluctuations. The railway congestion slowed cargo movements, leading to more alumina piled at railheads.

Despite the inventory build, China's alumina supply-demand ratio remained tightly balanced in the spot market during the week. Alumina production showed little change, with some refiners carrying out short-term maintenance stoppages. The 44 alumina producers tracked by Mysteel produced 1.78 million tonnes of metallurgical-grade alumina over March 13-19, down by a marginal 0.3% from a week ago, Mysteel's survey findings showed.

Limited spot availability and rising transportation costs continued to support spot alumina prices. On March 19, Mysteel assessed the national average spot price for smelter-grade alumina with a minimum purity of 98.6% at Yuan 2,747/tonne ($399/t), up 2% on week.

Written by Iris Pang, pangjunyu@mysteel.com

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