Asia Alumina: Australia, China Strengthened by Smelting Rates

The Australian alumina market firmed marginally Thursday, driven by a new surge in China’s domestic alumina prices and increasing smelting rates.

Australian alumina daily assessment rose 50 cents/mt day on day to $230/mt FOB Thursday, and was up $1.50/mt week on week.

The premium for Western Australian alumina to Chinese domestic material continued to dwindle, slipping to about $8.50/mt and Yuan 57/mt Thursday in import parity terms for tons from Shanxi province. The premium was around $29/mt and Yuan 193/mt a month ago.

Consumers have made a number of inquiries in recent weeks for alumina shipments in October and November but have yet to follow through with purchases.

Sellers were holding out for $234-$235/mt FOB Australia. Smelters appeared to be warming to the notion of having to pay at least $230/mt FOB Australia and around $244/mt CIF Lianyungang/China main port, but there have been few bids.

Steep increases in handysize freight rates in Asia in the last three weeks may have prevented the FOB alumina price from rising more quickly. A three-week downswing in LME aluminum values has also prompted prospective alumina buyers to wait in the sidelines.

The China alumina daily assessment for Shanxi province rose Yuan 30/mt day on day Thursday to Yuan 1,920/mt ex-works in cash. Increased outbound coal traffic has caused acute congestion on the local rail network and delays in the transportation of alumina, market participants said.

Increasing aluminum smelting rates in China have also boosted alumina consumption, sources said.