Market sees limited room for further fall in Chinese alumina prices

After weeks of declines, Chinese alumina prices seemed to be stabilising this week with supply and demand approaching a balance.

On the local spot market, alumina prices were at 2,180-2,520 yuan ($353-408) per tonne on Thursday April 24, compared with 2,200-2,520 yuan per tonne on Thursday April 10.

Imported alumina was offered around $323.5 per tonne fob Australia this week, compared $319-320.5 per tonne fob Australia for the week of April 10.

China port prices for alumina were in the range of 2,520-2,550 yuan per tonne this week, compared with 2,540-2,550 yuan per tonne fot in Liangyungang of Jiangsu province for the week of April 10.

Rallies in aluminium futures prices on the Shanghai Futures Exchange this week provided little boost to alumina prices.

"It is still in question whether the rebound [in aluminium futures prices] would last for long. There are no fundamental factors supporting aluminium prices, this is speculation," a Beijing analyst said.

Few are expecting smelters to resume or beef up production any time soon as a result of the higher aluminium prices.

"I would say the recent higher aluminium prices would at most delay production cuts, rather than encourage producers to resume operations," a major trader said.

Most market participants, however, agreed that there is limited room for further falls in alumina prices.

"Alumina can fall by another 30-50 yuan; no more. The current prices are already near costs and some state-owned refineries are in losses," the analyst said.

The upcoming holidays on May 1 and May 2 in China may douse further market activity.

Even if there are some smelters hoping to add raw material inventory before the holiday, "they would be able to ask for lower prices as it is a buyers' market now," the analyst said.

On Thursday April 24, the Shanghai Futures Exchange July aluminium contract ended at 13,695 yuan per tonne, up 3% from the close on Friday April 18.

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