Alumina prices in China slide as aluminium nears five-year low

Chinese alumina prices were down again this week as demand from local smelters remained depressed amid production cuts and aluminium prices approached a five-year low.

Alumina was offered at $318 per tonne fob Australia this week, compared with $320-321 per tonne last week, according to market participants.

"We have no interest to buy until the price falls to $315 per tonne at least," a major trader said.

China port prices for alumina ranged between 2,550-2,580 yuan ($414-419) per tonne fot in Lianyungang of Jiangsu province, compared with 2,570-2,590 yuan per tonne last week.

On the local spot market, alumina was trading at 2,230-2,540 yuan per tonne, compared with 2,290-2,550 yuan per tonne on Friday March 14.

Production Cuts

Market sources pointed that smelter Henan Shenhuo Group is going to halt 100,000-tpy capacity by the end of this week, as the 900,000 tpy-smelter joins the list of producers who have reduced output.

A Shenhuo official declined to confirm the plan on Thursday. The Shenzhen-listed smelter is slated to publish its 2013 annual results on Friday March 28.

"So far this year, around 500,000 tpy aluminium smelting capacity has been halted, with more production cuts expected in the coming months," an analyst said.

On Thursday March 20, the Shanghai Futures Exchange June aluminium contract fell to 12,635 yuan per tonne, the lowest since April 30 2009, when it had touched 12,560 yuan per tonne.

On the Changjiang Nonferrous Metals market, aluminium was trading at 12,440-12,480 yuan per tonne on Thursday.

Outlook

"It is hard to make any judgment on the outlook, but I personally feel alumina prices will further weaken," the trader said.

Others see local alumina prices falling to 2,100 yuan per tonne in south-west China.

"Production costs for alumina have been the lowest in that region and the current prices are still above local alumina makers' cash cost," Liu Lingan, Beijing-based analyst of Baichuan, said.

"Many aluminium production cuts recently happened in Guangxi or surrounding areas [in south-west China], resulting in big pressures on alumina prices," Lingan added.

"I think the Chinese aluminium industry as a whole would have to suffer for a while and the aluminium production cost may prove insufficient to support prices," the trader said.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.