Spot alumina prices in China hit a new all-time high on October 15 due to disruptions in bauxite supplies from Guinea, the largest exporter, and strong demand from refiners. Industry sources expect alumina price dynamics to continue in the coming months.
Platts, S&P Global Commodity Insights, priced Chinese domestic alumina at 4,450 yuan/t ex-Shaanxi refinery on Oct. 15, up 50 yuan than on the same day, and 460 yuan/t higher than a month earlier, reaching the highest level since Platts assessment began in August 2010.
Futures prices reflected bullish market sentiment: October 14 The November contract on the Shanghai Futures Exchange exceeded the daily trading limit of 7% to reach 4,818 yuan per tonne ($677 per tonne), the highest level since the launch of SHFE alumina futures in June 2023, before falling by 1. 2% and closed at 4,688 yuan per tonne (US$659 per tonne) on October 15.
Driving factors
Supplies from Guinea, the largest supplier of bauxite to China, over the past few months have experienced disruptions, first due to adverse weather conditions and now due to export blocks by Guinea customs authorities.
“We can confirm that bauxite exports from Guinea Alumina Corporation (GAC) are currently suspended customs. We are seeking clarity from Customs regarding the reason for these actions and are working to resolve this issue as quickly as possible,” GAC owner Emirates Global Aluminum said in a statement to Commodity Insights on October 14.
GAC will be in 2023, according to the company’s website. exported 14.1 million wet metric tons of bauxite.
The company said production at its Al Taweelah alumina refinery in the UAE, which uses GAC feedstock, is continuing as normal and that it does not foresee any impact.
Meanwhile, domestic supplies of bauxite in China were limited amid strong demand from the processing industry and limited production growth.
Sources said authorities may not order aluminum smelters in Yunnan province limit production until the end of this year given good water availability, meaning they can continue to ramp up production during a period of good profitability.
Chinese steel mills' profit margins may remain unchanged in October, according to state research agency Antaike above 2,000 yuan ($281) per ton after September's rate rose 12.2% from August.
The lack of import arbitrage opportunities is also leading to a decline in supplies to China.
According to Commodity Insights, Australian alumina prices have remained above domestic Chinese prices since May 28, and the delta widened in September, indicating that alumina imports into China remain unprofitable.
Australian alumina was about $141 per tonne above Chinese production on theoretical import parity terms on October 14, based on Platts estimates of $645 per tonne FOB Australia, 4,400 yuan per tonne ex-Shanxi plant and a freight rate of $26.5 per tonne for shipments of 30,000 metric tons from Western Australia to Lianyungang, China.
