WEEKLY: Chinese spot alumina prices edge up on Guinea bauxite supply concerns

Concerns among Chinese market participants heightened last week after reports that Guinea, the largest supplier of China's imported bauxite, plans to introduce measures next month to curb bauxite exports. The prospect of tighter availability of this key raw material for alumina refining lent support to alumina futures during the week.

By the close of the daytime trading session on May 28, the price of the most-traded alumina futures contract for September delivery on the Shanghai Futures Exchange ended at Yuan 2,868/tonne ($424/t), surging by 5.9% from a week earlier.

The firmer sentiment for futures filtered through to the spot market, where many producers and traders either held their offers firm or lifted them. As a result, spot prices recorded modest rises. On May 28, Mysteel assessed the national average price for metallurgical-grade alumina with a minimum purity of 98.6% at Yuan 2,704/t, up by Yuan 4/t or 0.1% from a week earlier.

On the supply side, China's alumina production stayed largely stable during the same week, with most producers maintaining steady operations. Output from the 44 alumina producers tracked by Mysteel totalled 1.8 million tonnes during May 22-28, marking a further 0.3% increase from the prior week.

Meanwhile, alumina inventories also mounted further. By May 28, total alumina stocks across China's ten ports, 44 alumina refiners, 89 primary aluminum smelters, and rail yards or in transit had climbed to a new high of 6.18 million tonnes, up 0.7% on week, according to Mysteel's survey.

The inventory increase was mainly driven by rising portside and in-transit stocks, as slower cargo pick-up at ports and longer domestic transportation times for imported alumina shipments weighed on material flows.

Written by Iris Pang, pangjunyu@mysteel.com

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