China's alumina prices lost upward momentum in the last week of 2022, and remained stand still on the first trading day of 2023. Smelters showed weak demand for spot cargoes and held wait-and-see attitude. The spot market remained quiet. Mysteel attributes it to weakening support from the fundamentals, including stable supply, falling demand, and improving margins.
On January 3, Mysteel's daily assessments for Shanxi spot alumina were Yuan 2,940-2,980/t EXW and including VAT, unchanged from the last trading day of 2022, and assessments for Guangxi also stabilized at Yuan 2,840-2,860/t.
Data: Mysteel
According to Mysteel's survey, China's alumina supply increased in the second half of December 2022, when some refineries resumed production. The operating rate of alumina producer remained low at below 80%. However, it has been recovering from the low point in mid November.
Data: Mysteel
When alumina supply remained stable, alumina demand weakened due to aluminum production cuts in Guizhou. Guizhou released a notice on power restrictions to local aluminum smelters on December 12, which led to a cut of around 270,000 tonnes of annual capacity of primary aluminum. On December 28, Guizhou Grid released a notice on further power restrictons on local aluminum smelters, which means more aluminum production will be cut. The growth of aluminum production in China slowed down.
Data: Mysteel
Alumina price rebound and falling coal and caustic soda prices ease the cost pressure of alumina producers, which lowers the expectations on alumina production cuts.
Mysteel predicts that the rebound of alumina price has come to an end, and the price will likely see a decrease after a short-term standstill.