China Spot Alumina Firms to Yuan 1,750/mt on Henan Refinery Cuts

The China ex-works Shanxi alumina assessment closed the week Friday at Yuan 1,750/mt ($263) in full cash terms, up Yuan 20/mt from Thursday and a week ago, but down Yuan 10/mt on the month.

There was talk that a refiner has sold 30,000 mt at Yuan 1,800/mt to a smelter, but the deal and its details could not be confirmed Friday.

A Southwest China smelter said they were currently in talks with Shanxi refiners to buy spot at around Yuan 1,750/mt cash, and negotiations remained ongoing.

Short-term sentiment firmed this week on the back of Henan Wanji’s 1.2 million mt/year refinery shutdown due to red mud landslides, which have resulted in higher offers from sellers across the country. Another Henan refinery, Kaiman Aluminium, has also reportedly cut back its 1.6 million mt/year alumina capacity recently, following environmental inspections last month that required them to switch from using coal gas to natural gas in their operations.

Henan authorities have confirmed the Wanji shutdown this week, while Kaiman officials could not be reached for comment. Most market participants surveyed on Friday were of the opinion that Kaiman has already switched over to natural gas without disrupting production, while some believed the refiner has shut down one line of 400,000 mt/year to facilitate the change.

“But regardless, even if Kaiman has shut a line, that’s not much impact on the market, since the amount is small, and they can probably resume very fast,” a Shanghai-based trader said.

“Kaiman is not the support, we hear they didn’t even have to cut back at all, but together with Wanji, there’s just a lot of talks going around now,” a Shanxi refiner added.

Four Chinese smelters agreed, saying that the current support was mainly psychological, and expected to be short lived.

“Prices are going up too fast…but refiners stockpiles are still high and Wanji can probably resume in one to three months, so it won’t be long term,” a Henan smelter said.

A South China smelter agreed, adding: “It’s just sellers taking the opportunity to push prices up, it won’t last.”

On Friday, the front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 12,615/mt, up from Yuan 12,500/mt last week, but down from Yuan 12,955/mt a month ago.