Australia alumina: Western traders buy at least 80,000 mt on stronger expected demand

The Platts Australian alumina daily assessment rose $1/mt from Thursday to $315.50/mt FOB, with bids and offers lifted by anticipated restocking in China during the fourth quarter.

Western traders bought at least 80,000 mt of alumina this week of Australian and Brazilian origins, in anticipation of stronger Chinese demand in coming months.

In addition, a producer sold a further 35,000 mt of Australian Yarwun material on Friday at $312.50/mt FOB Gladstone LC at sight for shipment in September. However, Platts was unable to immediately identify the buyer.

On Thursday, a 50,000 mt Brazilian Alumar parcel traded at $335/mt CIF Lianyungang BL 30 days for loading in September, between a producer and western trader.

Another western trader picked up a 30,000 mt Australian Alcoa shipment on Wednesday at $315.50/mt FOB Bunbury/Kwinana prepayment.

Platts assessed the alumina freight rate Friday at $19.50/mt for a standard sized shipment from Western Australia to Lianyungang, China in the next 30 days. Freight to Lianyungang from Gladstone was assessed $2.50/mt higher.

For weeks Chinese and Western consumer, producer and trader sources have said they were expecting alumina demand to pick up in coming months as Chinese smelters look to rebuild low inventories and stockpile ahead of the winter season. Participants have also said repeatedly that alumina remains cheap relative to LME aluminum values.

However, Chinese consumers continue to experience tight cashflows and credit lines, sources said. Many domestic smelters are unable to breakeven even with metal prices at circa Yuan 14,000/mt ($2,274) on the Shanghai Futures Exchange, sources said.

Chinese consumer/resellers have been bidding below-market at up to $313/mt FOB Australia, saying they weren't prepared to pay more than domestic prices and Lianyungang port prices.

Consumers and traders noted that alumina remains long globally, with unplaced western material continuing to be shipped to China, where a portion may be expected to be put in storage.

The Platts China alumina daily assessment Henan province closed the week at Yuan 2,470/mt ex-works for 70:30 cash and credit payment terms. The assessment was up Yuan 10/mt on the week, and also Yuan 30/mt on the month.

Alumina prices across China have risen on the back of increased domestic smelting capacities and higher aluminum prices on the Shanghai Futures Exchange, sources said.

In neighboring Shanxi province, tradable levels were up since last week at Yuan 2,420-2,440/mt cash, from 2,400/mt last week. Inland smelters in Xinjiang province had started querying for Shanxi material to stockpile ahead of the winter season, a trader said Thursday.

Down south, Guangxi spot prices were also up at Yuan 2,270-2,300/mt cash, from Yuan 2,250-2,280/mt a week ago.

The front month August aluminum contract on the SHFE closed at Yuan 14,000/mt, up from Yuan 13,955/mt a week ago and also from Yuan 13,590/mt on the month.

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