Australian alumina weakened by thin demand, credit woes, longs

The Platts Australian alumina daily assessment at $310.50/mt FOB slipped 50 cents/mt from Monday, dragged down by lackluster demand, credit and cash woes in China and unplaced global cargoes.

With the majority of consumers in the Middle East and western regions already covered for the coming months, China has been the main prospective outlet for unplaced alumina. However, Chinese participants continue to be plagued by cash and credit shortages, which have been hindering their ability to secure imports.

Tight credit tends to be a recurring theme in the Chinese financial markets; however, a trade financing probe in China's Qingdao port has exacerbated access to bank loans, numerous sources have said in recent weeks.

In addition, poor aluminum margins in China have tightened the cash flow among local smelters, sources have also said.

Multiple Chinese consumer/reseller sources have said they wouldn't expect to pay as much as $310/mt FOB Australia and $330/mt CIF China. Prospective buyers have said they were eying $1-2/mt below these rates. Outside of China, at least one opportunistic buyer has said he may come in at $307/mt FOB Australia.

Sellers guidance have come down over the last week to around $311-312/mt FOB Australia, compared with $313-314/mt a week earlier.

The Platts China alumina daily assessment Henan province was stable at Yuan 2,440/mt ($397) ex-works for 70:30 cash and credit payment terms.

Meanwhile, China's Guangxi Yinhai Aluminum has restarted 180,000 mt/year of metal smelting capacity at its 250,000 mt/year plant in Laibin city, which it had completely shut down in March due to weak domestic metal prices and high costs, a company official told Platts Tuesday.

"The government has given us preferential power rates, so we just restarted last week, and expect to reach a 180,000 mt/year run rate by mid-August," he said.

In addition to Guangxi Yinhai, Chalco's 260,000 mt/year Zunyi Aluminum smelter in neighboring Guizhou province partially restarted in July, following cuts in power costs. Zunyi had shut down completely at the end of February.

Talk also emerged that Chalco's 400,000 mt/year Guizhou Aluminum smelter has restarted at a partial run rate, but that has not been confirmed.

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