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China Alumina Flat at Yuan 2,500/mt as Smelter Cuts Remain Unclear

“Deadlines in China are not definite, especially at the current domestic metal prices, smelters will want to stall as long as they can,” a Shanxi refiner said. “We must wait a few days, things don’t work so fast, and no news usually means...

From: platts.comDate: 2017-07-24 01:49:19Views: 618

The China ex-works Shanxi daily spot alumina assessment stood unchanged at Yuan 2,500/mt ($371/mt) full cash terms Thursday as the lack of clarity over smelter cuts prevailed.

Despite the deadline of July 20 announced by Xinjiang authorities earlier to see all required cuts completed, no confirmation was reported or heard on Thursday.

“Deadlines in China are not definite, especially at the current domestic metal prices, smelters will want to stall as long as they can,” a Shanxi refiner said.

“We must wait a few days, things don’t work so fast, and no news usually means they’ve not cut to target yet, and even likely to be way off [target],” a South China smelter added.

General expectation is that cutbacks in the Xinjiang region would reach 600,000-800,000 mt/year from smelters East Hope and Jiarun combined, but there was also talk that East Hope had stopped at 350,000 mt/year and remained in negotiations with the authorities.

East Hope could not be reached for comment on Thursday, and Jiarun had said they would not comment on their cuts when contacted by S&P Global Platts previously.

On Thursday, market talk also continued about Shandong smelters Hongqiao and Xinfa planning smelter cuts, but that remained unconfirmed as well, sources said.

Expectation is that Hongqiao may cut around 1 million mt/year of smelter capacity in Shandong, and Xinfa 500,000-600,000 mt/year, multiple market participants said this week.

Several sources said they have even heard both smelters notifying some downstream customers to expect reduced metal supply in the near term, which meant that smelter cuts were very likely, if true.

Most sources, however, expressed doubt that significant smelter cuts would happen in the near term in view of the firm metal prices.

“We’ll believe it when we see it,” the South China smelter said.

Meanwhile, a spot trade for Guangxi alumina was heard done at Yuan 2,750/mt cash this week, delivered to a smelter in Inner Mongolia. This would put ex-works Guangxi prices at Yuan 2,400-2,450/mt, as transport costs were indicated at Yuan 300-350/mt, several sources said.

The front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 14,330/mt on Thursday, up from Yuan 14,115/mt last week, and also from Yuan 13,920/mt a month ago.

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