SHANGHAI, Sep 13 (SMM) - Price review: The SMM weighted alumina index stood at 2,945 yuan/mt as of last Friday, down 4 yuan/mt from a week ago. The prices stood between 2,860-2,980 yuan/mt in Shandong (down 5 yuan/mt), 3,000-3,050 yuan/mt in Henan, 2,850-2,930 yuan/mt in Shanxi (down 5 yuan/mt), 2,900-2,980 yuan/mt in Guangxi, 2,850-2,930 yuan/mt in Guizhou, and 2,950-3,000 yuan/mt in Bayuquan.
Overseas market: A deal for 30,000 mt of alumina was done at $342/mt FOB Western Australia on September 8, an increase of $14/mt from the previous transaction, which was equivalent to 3,078.3 yuan/mt CIF China and 133.55 yuan/mt higher than the domestic spot prices. The ocean freight stood at $42/mt. The rally was driven by frequent output cuts by overseas smelters. However, as the demand has shown signs of weakening, it remains to be seen whether the price rise will sustain.
Domestic market: Only a few deals were done last week. Alumina refineries in Guiyang City, Guizhou Province, are currently under closed-off management in an attempt to contain the pandemic. Local refineries still hold about one month of raw material inventories, but their shipments of raw materials and finished products may be hindered if the pandemic situation deteriorates in the future. There have already been small-scale output cuts by aluminium smelters in Yunnan. Alumina demand will decline further if the output reduction expands.
Price evolution: China's metallurgical-grade alumina output totalled 6.84 million mt in August, down 1.4% month-on-month, but up 11.16% year-on-year. The daily average output stood at 220,800 mt. The domestic operating alumina capacity was 80.58 million mt last month, and the average operating rate stood at 85%. The domestic alumina market saw a surplus of 79,000 mt in August based on an estimate of a net export of 50,000 mt, and the surplus amounted to 878,000 mt from January to August. As of early September, the domestic market had maintained a tight balance. The subsequent price fluctuations will depend on how the supply and demand sides change.
