DAILY: China's alumina prices slip further, trading stable

Chinese spot and futures prices for alumina continued slipping on March 19, as the oversupply of alumina further weighed on prices. The same day, trading activity in the spot market was steady despite the lower settlement price.

The average prices for alumina with a more than 98.6% purity in China's five major alumina production bases all declined further on March 19, with those in Henan, Shanxi and Guizhou provinces dropping by Yuan 20/tonne ($2.8/t) from Tuesday to reach Yuan 3,215/t, Yuan 3,205/t, and Yuan 3,310/t respectively on Wednesday, according to Mysteel's daily price assessment.

In Shandong province, China's largest alumina-producing area, the average price assessed for the same grade of alumina by Mysteel fell by Yuan 35/t from the previous day to land at Yuan 3,160/t on March 19, the lowest among the five areas, Mysteel's tracking data showed.

Meanwhile, in the Guangxi autonomous region, the price dropped to Yuan 3,270/t on Wednesday, lower by Yuan 70/t from Tuesday and representing the biggest decrease among the five regions the same day.

New alumina production capacities that have been added this week, further worsening the alumina supply surplus in the domestic market and which might explain the weaker prices in Guangxi, market analysts said. Mysteel learned that an alumina producer based in the autonomous region this week has commissioned a 1 million tonnes/year production line as part of its phase two expansion.

Lower spot prices encouraged some buyers to secure some tonnage, market watchers noted, with trading in the spot market remaining stable on Wednesday. Meanwhile, Mysteel learned that a trader in Guangxi sold 2,000 tonnes of alumina at Yuan 3,150/t EXW to a primary aluminum smelter in Yunnan province on March 19. The settlement price was some Yuan 160/t lower than another deal, also for 2,000 tonnes and also concluded in Guangxi, agreed the previous day, as reported.

The derivatives market experienced a further fall yesterday mainly because some participants converted their futures positions into spot market transactions, market insiders explained. Prices of the 12 alumina futures contracts traded on the Shanghai Futures Exchange (SHFE) all slipped by Yuan 23-60/t, with the most-traded contract for May delivery closing the nighttime trading session at Yuan 2,978/t as of 1:00 am Thursday, lower by Yuan 60/t or 1.97% from the settlement price of Wednesday's daytime trading session, hitting the lowest closing level in over one year, the SHFE's data showed.

Written by Iris Pang, pangjunyu@mysteel.com

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