China Spot Alumina Drops to Yuan 3,650/mt As Metal Prices Plunge

China's spot alumina prices continued to lose ground on Thursday as domestic aluminum prices plunged, and traders are expected to step up clearing out of alumina stocks to take profits, sources said.

The front-month primary aluminum contract on the Shanghai Futures Exchange closed at Yuan 15,290/mt ($2,305) on Thursday, down from Yuan 15,675/mt Wednesday, and also from Yuan 16,080/mt a week ago.

The Platts China ex-works Shanxi daily spot alumina assessment dropped another Yuan 50/mt on Thursday to Yuan 3,650/mt cash, after falling Yuan 50/mt on Wednesday.

The current price is down Yuan 130/mt on the week but flat from a month ago.

"The lower metal prices means traders will dump even more now, they will all rush to take profits," a Shanxi-based refiner said. "Talk of the winter cuts are generally confirmed to happen, so there's nothing more to speculate [about] and it's all back to fundamentals," he added.

A refiner in Shandong said he did not rule out traders selling off to take profits, but believed most refiners would hold out at Yuan 3,700/mt minimum for now.

"We are also doubtful prices can hold above Yuan 3,700/mt much longer, but there's no need to rush and sell lower. The winter cuts will be happening soon," the Shandong-based refiner said.

A Henan-based refiner put current tradable levels at Yuan 3,600-3,700/mt cash, varying from traders to refiners, while a Sichuan smelter reported buying 10,000 mt this week from a trader at Yuan 3,650/mt partial credit terms.

Clearer market direction is expected next week when actual cuts for winter are slated to happen on November 15, sources said.

"Now there's just a lot of talk and rumors, but few actual trades to gauge direction. It should be better next week when actual cuts are likely to happen. There's also the major industry event next week that might shed more light on the situation," a Chinese trader-refiner said.

The China International Aluminum Week 2017 is scheduled to take place from November 14-17 in Fujian province.