SHFE alumina 2311 contract jumps 3% today boosted by curtailment concerns in north China

The rumors of bauxite supply disruptions in Henan pushed up SHFE alumina prices on June 26. It was rumored that some bauxite mines in Henan are required to stop production due to environmental policy, which may lead to some alumina production cuts in that province. SHFE 2311 contract closed at Yuan2802/t on June 26, up Yuan71/t from the previous trading day. Mysteel daily assessment for Shanxi spot alumina remained unchanged at Yuan 2,800/t, and assessment for Guangxi spot alumina stood firm at Yuan 2,775/t.

China's alumina prices started the downward trend in March due to oversupply. The prices stopped falling of late driven by high production cost and rising demand. However, the market was still waiting for a point that is strong enough to stimulate the price to change its direction. 

Source: Mysteel

According to Mysteel's survey, the operating rate of alumina in Henan has been standing below 70% before the rumors due to high production cost and tight supply of domestic bauxite. Mysteel made a field trip to refineries in Henan before the holiday. According to alumina producers, around 70% of local refining capacity relies on seaborne bauxite. It remains to be seen whether the supply disruptions of domestic bauxite will lead to a further decline of the operating capacity in Henan.  

Mysteel believes that China's alumina prices have bottomed out, and aluminum restart in Yunnan will be a key driver for alumina price rebound. According to Mysteel, some aluminum smelters in Yunnan have begun to restart as expected, which will lead to further recovery of China's primary aluminum production.