DAILY: Chinese spot alumina prices continue edging down

China’s spot alumina prices generally edged lower on March 24, while futures prices ticked up again. Amid competitive pricing, purchasing decisions in the spot market were made cautiously.

On Monday, the average prices for alumina with a purity level of over 98.6% in four of China's five key alumina production bases declined further, with those in Shanxi and Henan provinces both nudging down by Yuan 10/tonne ($1.4/t) to Yuan 3,155/t and Yuan 3,165/t respectively, Mysteel's daily price assessment showed. The prices had dropped for the 11th straight working day in Shanxi and for the 13th consecutive working day in Henan, Mysteel Global observed.

Meanwhile, the average price for the same grade of alumina in Shandong province edged lower by Yuan 5/t from last Friday to Yuan 3,125/t on March 24, according to Mysteel's tracking data. Similarly, the price assessed by Mysteel for the Guangxi autonomous region slipped by Yuan 20/t to reach Yuan 3,180/t on Monday.

On the other hand, the price in Guizhou province remained unchanged from the prior working day at Yuan 3,270/t on March 24, ending the drop seen over the past four working days in the area, the data showed.

The decline in spot prices also reflected the competitive pricing in the spot market, industry insiders noted. To score a better deal, buyers were cautious when making purchases of spot alumina. Mysteel learned that a primary aluminum smelter in Northwest China purchased alumina from a trader in North China through an open tender at a delivered price of Yuan 3,360-3,370/t on Monday.

The softening of spot alumina prices is also pressuring prices of refining inputs such as liquid caustic soda, Mysteel Global notes. On March 25, Mysteel assessed the price of ionic membrane liquid caustic soda with a mass concentration of 32%, one of the key raw materials for the production of alumina, at Yuan 910/t in Shandong, China's largest alumina production base, lower by Yuan 50/t or 5.21% from March 21.

By contrast to the spot alumina market, speculators' confidence in the futures market strengthened on Monday, with the prices of most alumina futures contracts traded on the Shanghai Futures Exchange (SHFE) increasing by Yuan 2-11/t during the nighttime trading session. The price of the most-traded contract for May delivery closed Yuan 11/t higher at Yuan 3,074/t as of 1:00 am Tuesday, increasing for three working days in a row, the SHFE's data showed.

Written by Iris Pang, pangjunyu@mysteel.com

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