COMEX STAT data shows that Brazil's alumina exports are 908,000 tons in August, increasing 35% MoM and 62% YoY. The exports to Canada increased sharply mainly due to rising alumina demand from that country after a smelter restarted in late Q2. Nonetheless, the total export volume decreased 3.6% to 5.81 million tons from January to August. The main reasons for the decline are rising domestic demand and shrinking overseas demand.
Brazil alumina exports
Data Source: COMEX STAT
Mysteel research shows that Brazil's annual alumina capacity has exceeded 10 million tons, but the annual primary aluminum production capacity is only 1.34 million tons. The huge difference between upstream and downstream production capacity makes Brazil one of the world's leading alumina exporters, and the products mainly flow to Canada, Norway, the United States and Iceland.
With the resumption of production and stable development of primary aluminum enterprises in Brazil, the domestic demand for alumina keeps rising. According to Mysteel's survey, with the increase of rainfall in Brazil in H1 2022, the water level of the reservoir has also risen sharply, which provided power guarantee for the resumption of production of aluminum smelters in the country. After the power recovery, the power cost of aluminum enterprises in Brazil has also decreased significantly, which enhanced the enthusiasm of smelters to restart. At present, in addition to Albras smelter, which has completed the production recovery at the end of July 2022, Companhia Brasileira de Alumínio and Alumar smelter are still in the process of production recovery.
While domestic demand increases, external demand declines due to the decrease of primary aluminum production in Europe and the United States. Both the United States and Norway, two major destinations of Brazil alumina, have seen the reduction of primary aluminum production, and there is a trend to continue to expand. After Alcoa announced the production reduction of Lisa smelter in Norway at the end of August 2022, recently, Norsk Hydro A.S.also announced that it had decided to reduce the production of two aluminum smelters because the weakening demand in Europe. By the end of September, Norway had announced the reduction of capacity about 150,000 tons per year.
In addition, the alumina exported from Brazil to Iceland showed a significant downward trend compared with the same period last year, but this phenomenon is not due to the weakening demand of alumina in Iceland. According to Mysteel, there has no aluminum production cuts driven by energy crisis in Iceland so far, and the demand of alumina remains stable at around 130,000 tons per month, but the proportion of import sources has been changed. From the end of the third quarter of 2021, Iceland's alumina imports from Australia has increased significantly, while the import volume from Brazil has been declined.
Written by Zerlina Yang, Yangzirui@mysteel.com
