China alumina supply not to be affected by natural gas shortage; prices to dip further

Market participants have expected alumina prices to rebound following some production cuts due to shortage of natural gas. However, analysts from SMM believe natural gas rationing will have little influence on alumina output next week so the price would slope downward further.

Lower inventories have supported alumina prices in the short term; however, SMM believes alumina price is unlikely to rebound further.  As updated by Shanghai Metals Market, average spot alumina price in China stands unchanged on December 25 after rising slightly up to RMB 2889 per tonne on December 22. Domestic spot alumina prices have also stayed unchanged from RMB 2860/t on December 22.

According to an SMM update, four alumina plants, including that of China Power Investment Corp in Shanxi province, which use natural gas as the major gas source were affected by the shortage of natural gas and a total of 2.29 million tpy of capacity were impacted.

While alumina output has been compromised, production of aluminium hydroxide has been unaffected. Most other alumina plants in Shanxi and Henan provinces have other substitute fuel sources including coal gas to replace natural gas. That is the reason the natural gas shortage is not expected to cause a large production cut.

Other raw materials like bauxite (6.0≤Al/Si£¼7.0)in Shanxi province has dropped from RMB 407.5/t on December 18 to RMB 380/t on December 25. Bauxite prices have also dropped in other provinces driven by slow demand from domestic alumina refineries.

Prebaked anode prices remain unchanged today.

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