Chinese Alumina Prices Steady Despite Fall in Domestic Aluminum Levels

Chinese spot alumina prices stood steady Tuesday despite weaker aluminum prices this week, and trade activity was thin as market participants awaited clearer direction.

Buyers shied away in anticipation of lower prices, should ingot levels fall further, while sellers eyed a possible rebound in aluminum prices in the near term.

"Aluminum prices have been falling this week, so there's no trades for alumina. Everyone is cautious. Metal has been very volatile and no one can be sure how the trend will go next, so they will just wait," a South China smelter said.

"Metal fell mainly on speculative factors, not fundamentals, so it's hard to predict what will happen next. There's also the holiday weekend coming up, so everyone is hoping for clearer direction when the market returns next week," a Beijing-based trader said.

The Platts China ex-works Shanxi spot alumina assessment continued Tuesday at Yuan 1,970/mt ($300/mt) full cash terms, unchanged from Monday but down Yuan 10/mt on the week, and down Yuan 30/mt from a month ago.

Ex-works Henan and Guangxi spot alumina prices were also range bound Tuesday at around Yuan 2,000/mt and Yuan 1,860-1,880/mt cash, respectively, sources said.

The front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 12,140/mt on Tuesday, down from Yuan 12,500/mt last week, and from Yuan 12,440/mt the month before.

"But domestic metal prices have been falling and rebounding in recent weeks, so it's very uncertain where the trend is going next. We just need to wait and see if ingot prices can hold next week when we return from holidays," a Henan refiner source said.

Current market views are mixed on the metal price direction, but most expect alumina prices to remain relatively stable in the near term. New smelter capacities ramping up this year, along with potential smelter restarts, will continue to support demand for alumina, sources said.

At least 2 million-3 million mt/year of new smelter capacities are expected to come online this year, while there's still possibility that part of the 4 million-5 million mt/year of idled capacity earlier may be restarted later this year, sources added.