DAILY: Chinese alumina prices keep weakening, trading improves

The average prices for alumina with a purity level of over 98.6% in four of China's five major alumina production bases decreased last Friday, with those assessed by Mysteel for East China's Shandong and North China's Shanxi both dropping by Yuan 40/tonne ($5.5/t) from March 13 to reach Yuan 3,265/t and Yuan 3,260/t respectively on March 14.

The same day, prices for the same grade in Central China's Henan and Southwest China's Guizhou declined by Yuan 30/t from the previous working day to land at Yuan 3,270/t and Yuan 3,400/t respectively, Mysteel's daily price assessment showed.

On the other hand, the average price in Southwest China's Guangxi remained at Yuan 3,380/t on March 14, unchanged for the 14th consecutive working day since February 25, Mysteel Global noted.

A reduction in output among some alumina producers recently has softened the impact of oversupply, market insiders noted. Following a production cut by an alumina refiner in Shanxi last Monday, Mysteel learned that another refiner in Henan was intending to suspend operations on its 400,000 tonnes/year production line starting from March 15 for 15-20 days to undertake maintenance on a boiler.

The lower spot alumina prices and production cuts prompted some buyers to enter the spot market to make purchases last Friday. Mysteel heard that one deal was concluded on March 14, compared to none on Thursday. A trader in Guizhou sold 5,000 tonnes of alumina at Yuan 3,280/t EXW to a primary aluminum smelter in Southwest China's Sichuan.

However, mounting port inventories of alumina last week reflected a glut of the material, weakening the outlook for future alumina demand in the domestic market, according to market analysts. The total alumina stocks at the ten major Chinese ports under Mysteel's regular tracking increased to 70,000 tonnes as of March 13, higher by 30,000 tonnes or 75% from the previous week, results of Mysteel's latest survey showed.

Amid the weak sentiment, prices of the 12 alumina futures contracts listed on the Shanghai Futures Exchange (SHFE) all slipped last Friday, with the most-traded contract for May delivery closing the nighttime trading session at Yuan 3,129/t, lower by Yuan 8/t from the settlement price of last Friday's daytime trading session, according to the SHFE's data.

Written by Iris Pang, pangjunyu@mysteel.com

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