Australia Stable Overnight But Down $6.50/mt On Week

The Australian alumina daily assessment was static Thursday at $342.50/mt FOB, although it has declined $6.50/mt in the last week, dragged by stockbuild in China.

On Thursday, indicative bid, ask levels were $340-$341/mt FOB Australia, versus $345-$350/mt.

A number of market participants have said the Australian price decreases have been slower than expected. Others participants attributed this to a combined pent-up demand among Asian, Middle Eastern and Western parties outside of China.

Bauxite shipment delays have compromised some alumina production in Asia, sources said in the last two weeks.

Also, during the last quarter of 2016 and into January this year, when China was pursuing tons aggressively, buyers from the rest of the world had pared down their own purchasing. Certain smelters outside of China drew down their stocks, a producer source noted recently. This, combined with high smelting rates in China, India, Malaysia, the Middle East, and smelting growth rates in North America, now appear to be supporting the price of Australian alumina, sources said.

Also, market sources noted that although China has surplus tons, certain Chinese importers have not been able to easily resell offshore alumina, because some of their contracts were settled CIF China basis. The CIF-bought tons must go to China, and are less viable for resale than FOB-settled units, sources said.

In the last week, producer and Chinese importer sources have reported approaches from buyers in Asia and the Middle East. They also said Western traders do not appear to have enough longs.

A consumer-and-trader put the market for April/May tons at around $345/mt FOB Australia. A producer said bid, ask levels were $340-$350/mt FOB Australia.

A consumer put the ceiling for April/May tons at $340/mt FOB Australia.

A consumer-and-trader regarded $342.50-$343/mt FOB Australia a reasonable reflection of the market in the immediate term, but said he was expecting downside in the longer term, as the Australian premium to Chinese alumina has become too high.

Another consumer-and-trader said Chinese buyers would typically be prepared to pay a $15/mt premium for Australian alumina, compared to Chinese tons, in import parity terms.

A trader reported the purchase of 10,000 mt of duty-paid European units at $340/mt FOB.

S&P Global Platts assessed the Handysize freight rate at $16.20/mt on Thursday for a 30,000-mt shipment in April from Western Australia to Lianyungang, China.

The Platts Shanxi daily assessment was stable Thursday at Yuan 2,780/mt ex-works in cash, although it has plunged Yuan 70/mt ($10.13/mt) in the last week.

On Thursday, Australian alumina was costlier by about $24/mt and Yuan 168/mt to Chinese material from Shanxi province, in import parity terms.