Chemical News
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China alumina prices supported as SHFE aluminum hits 8-month high
http://www.chemnet.com Apr 20,2016 Platts
Alumina prices have been tracking domestic metal prices higher this week, and are expected to continue testing higher in the near term should aluminum prices remain supported, market participants said.
The front-month aluminum contract on the Shanghai Futures Exchange hit an eight-month high on Tuesday to close at Yuan 12,020/mt. The last time the SHFE price was above this level was on August 14, 2015, when the front-month price settled at Yuan 12,030/mt. The current price was also up from Yuan 11,765/mt last week and from Yuan 11,425/mt a month earlier.
Spot alumina offers from refiners rose as market sentiment turned more bullish, sources said. Ex-works Shanxi offers were heard mostly at Yuan 1,990-2,000/mt cash Tuesday, up from around Yuan 1,980/mt previously.
"Offers are higher and ingot is the main support, but there are very few trades...still, if anyone wants to buy, they will have to pay more," a South China smelter said, pegging tradeable levels at around Yuan 1,980/mt cash.
Chinese aluminum prices are expected to stay rangebound in the near term, likely hovering around Yuan 12,000/mt. But in the longer run, any more upward movement will be limited by looming smelter restarts, sources said.
Several smelters have said they were eying possible restarts should prices reach Yuan 12,000/mt.
"But that's unlikely to happen immediately, it's just a lot of talk. No actual restarts have been seen and most people will want to see some stability in price before they restart," a Chinese trader said.
Chinese alumina prices are facing a similar situation as metal, with refiners planning restarts should prices hit Yuan 2,000/mt. But unlike aluminum, refineries can restart much faster which could mean a cap on alumina price increases in the near term.
"If refiners restart, we can probably see the impact on the market within a month, that's how long it'll take for added output to be seen...for smelters, even if they restart now, it'll take at least two to three months [to actually affect the market with additional output]," a Shanxi refiner said.
Meanwhile, ex-works Henan spot alumina prices remained unchanged at Yuan 1,980-2,000/mt cash, with offers steady at Yuan 2,000-2,050/mt cash on Tuesday. Ex-works Guangxi prices were also stable at Yuan 1,830-1,850/mt cash, sources said.
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