Chinese domestic alumina prices edge lower, tracking metal market

Chinese alumina prices have edged lower, tracking the domestic aluminum market, industry sources said Monday.

The Platts ex-works Henan alumina price stood at Yuan 2,490/mt ($406/mt) at 30% credit payment terms Monday, down Yuan 10/mt from Yuan 2,500/mt on Friday and a week earlier.

In neighboring Shanxi province, alumina prices were mostly pegged at Yuan 2,440-2,470/mt cash up to 30% credit, down from Yuan 2,560-2,480/mt a week earlier. In Guangxi in the south, spot alumina prices were also heard lower at Yuan 2,280-2,320/mt cash to partial credit terms, compared with Yuan 2,300-2,350/mt a week earlier, several refiner, trade and smelter sources said.

Refiners' offers in Henan are mostly holding around Yuan 2,500/mt, but tradable levels have weakened to Yuan 2,470/mt to Yuan 2,490/mt cash up to 30% credit, multiple sources said.

"There is limited March spot in Henan now, so offers are holding. But market sentiment is very weak, so some refiners may be willing to sell lower," a Henan refiner said.

Traders and smelters agreed, adding that Henan prices were also facing pressure from falling alumina prices across the country.

"Term contract prices are very low, around Yuan 2,300/mt now, and that has pressured down spot prices in Shanxi, which has also seen an increase in alumina capacity in the past year," a Shanghai-based trader said.

Alumina term contracts in China are typically priced at 17-17.5% of the average aluminum contract price on the Shanghai Futures Exchange for three months, which stood at around Yuan 12,880/mt Monday.

Shanxi's alumina capacity has risen about 4 million mt/year in the past year after several new refinery startups.

In the south, Guangxi alumina prices have also faced added pressure from smelter cutbacks in nearby Guizhou province recently.

Guizhou's Zunyi Aluminum had shut down its 260,000 mt/year refinery at end-February. Guizhou Aluminium has also cut back by 100,000-200,000 mt/year, sources in the region said, but the company could not be reached for comment.

In the near term, domestic alumina was likely to remain on a downward trend, with April spot expected to hover at Yuan 2,470-2,480/mt cash to partial credit terms, sources said.

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