Chinese Alumina to be Confronted With Prices Fall Further

Alumina manufacturers express that the prices of Chinese alumina could fall further in the next quarter. The alumina prices have fallen about 6% last quarter, because the production rose more than the demand.

Alumina is the important raw material of aluminum production that is generally used in production and living.

Alumina also accounts for about 40% of the primary aluminum production costs, and the low prices will lead to China's aluminum smelters slowing the production reduction.

It had previously expected that the annual production capacity of aluminum will be reduced about 5 million tons by the end of this year.

Industry insiders in the smelter said that China's spot alumina price is about 2200-2400 RMB per ton (US $346-377) this week, and about 2350-2550 RMB per ton in June.

An analyst, Xu Hongping as well as a trading manager in large aluminum smelters says that the alumina prices could test 2000 RMB next quarter.

Xu says most of the alumina refineries in China are profitable, and it should inspire new capacity.

She predicts that more than 9 million tons of production capacity will be produced this year, and more than 200 ten thousand tons of spare capacity will resume the production.

Industry executives expect that most of the production costs of refineries will be lower than 2000 RMB per ton at present.

"Alumina prices should fall further, because the aluminum smelters cut the production, but the alumina refineries do not cut the production." the executives of a smelter says.

China's alumina production reached 4.88 million tons in August.

Over the past two months, in contrast, China's aluminum production is decreased, and so far, the smelters have shut down the higher costs production capacity about 2 million tons this year, due to the inhibition of growth and excess supply on metal prices. In the next few months, it is expected to close more capacity.

On Friday, the price of spot aluminum is about 11870 RMB per ton. Traders says that the prices of domestic alumina still remain weak and it also restricts imports.

The first seven months of this year, the imports of Chinese alumina sharply decreased by 27% year-on-year, and Australia is the biggest supplier.