Bauxite shortage in China is impeding alumina restart in the country

About 30 percent production of alumina refineries and aluminium smelters was cut in many parts of China, including Henan, during November 2017 to March 2018 for bringing the air pollution in check. March 15 was the date they were looking forward to for restarting the alumina production after clearing all the environmental and legal pre-requisites. But now, a new hindrance seems to have interrupted their initiation. The rising costs and meagre supply of raw material bauxite may delay the restart of the Chinese alumina refineries in Henan province, as reported by Antaike.

This slower than expected return of alumina production in China has brought in a new anxiety among the country’s aluminium smelters, for whom alumina is an essential feedstock. The latter may have to contend with higher costs at a time when metal prices have slipped to near a 14-month low.

“Although the heating season has ended, due to weather, market and other factors, some large-scale alumina companies are looking into or have already decided to postpone the restart of shuttered production capacity,” said Antaike, the research arm of the China Nonferrous Metals Industry Association, in a note.

The association further adds to the note that Henan province has shut in 3.4 million tonnes per year of alumina production capacity, or 80 per cent of the capacity that was closed across the nation, during the winter closures.

The impact of the cuts led to a downfall of the aluminium production in the country by 10.4 per cent during January to February period, which was about 10.25 per cent million tonnes in the same period of the previous year, as reported by the National Bureau of Statistics.

The sudden sagging of alumina prices is estimated to have an unfavourable effect on alumina firms’ profit margins, which in turn may also reduce their incentive to restart.

On the other hand, spot alumina prices in Central China SMM-ALM-CCHN, as assessed by data provider SMM, have also slipped by about 1,000 yuan and rounded up at 2,730 yuan ($431.71) a tonne since November, as demand for the material from smelters dropped due to winter cuts. However, some positivity is shown by spot bauxite prices in Henan SMM-BAUX-HENXI as they were up from 390 yuan to 415 yuan a tonne in the week ended March 12.

Down the line, if the restarts are below expectations, then domestic alumina supply and demand will likely to remain a tightly balanced structure, providing some support for prices, as apprehended by Antaike.

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.