Chinese alumina prices falling on imports and output

Reuters quoted traders and smelter officials said Aluminum Corp of China Ltd, the country's top alumina producer, could cut its price for the material by around 10% later this month as high imports and increased domestic production drive down spot prices.

Spot alumina prices have fallen 15% in the past two months in China, the world's top user of the material used for aluminium production. Traders and smelter officials said spot alumina traded around CNY 1,950 per tonne versus CNY 2,300 in early April.

A trading manager at a large aluminium smelter which had booked spot imports for delivery in April to June said "High imports are weighing on local alumina prices."

Smelter officials and traders predicted that China produced more alumina than it needed in April, even as its alumina imports hit a 15-month high of 646,219 tonnes. Imports could be sustained near multi-month highs of 500,000 tonnes level in coming months.

Smelters had increased bookings of spot alumina in March and April due to low overseas prices. The booked spot shipments were set to arrive in China in April to June.

Traders said smelters were not keen to place new orders for spot alumina on weaker Chinese prices and increased alumina inventories.

Spot foreign alumina is being indicated at USD 240 per tonne for delivery to China versus about USD 270 in early April, though some foreign alumina suppliers such as Noranda Aluminum and Suriname Aluminium have reduced production.

Smelter officials, including the trading manager, said domestic alumina refineries had also restarted some idled and new capacity in April and May, anticipating a restart of capacity at aluminium smelters.

A manager at a large smelter in Henan province said "We get more offers for locally produced alumina these days."

Smelter officials said but demand for alumina was weaker than many industry officials thought as restarts of some 2.5-3 million tonnes were less than expected.

Chinese aluminium prices have hovered near the production cost for many smelters of around CNY 12,000 per tonne to CNY 13,000 per tonne, limiting the scope for bringing on new or idled capacity.

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