Fubao News
COVID-19 has disrupted the domestic supply of bauxite, caustic soda and coal with 5.5 mtpy in alumina capacity cuts to date. Domestic refineries including Shanxi Xinfa, Xing’an Chemicals, Chiping Xinfa, and Weiqiao refiners have all cut capacity. According to Aladdiny, domestic alumina output is estimated at 5.38 mln t, with average daily output of 185.4 kt in February, falling by 1.56 kt per day from January. Output is likely to fall further to 183 per day in March. Shrinking alumina supply has buoyed prices by 5.5% post-CNY holiday; domestic aluminium smelters are close to break-even as a result of rising costs and shrinking margins.
In February, several primary smelters postponed start-ups or resumption plans including Xinjiang Xinfa, East Hope Guyuan, and Guangyuan Zhongfu. Meanwhile, other smelters brought new projects online according to schedule, such as Yixin of Yunnan Aluminium, Yunnan Shenhuo, Yunnan Wenshan Al. Despite minor losses, massive long-term capacity cuts by aluminium smelters are unlikely to take place in March. According to Aladdiny, domestic primary aluminum output is estimated at 2.93 mln t in February, with average daily output of 100.93 kt – a figure which has the potential to grow to 101 kt per day in March 2020.
Aladdiny surveying shows that road transport of bauxite and alumina has returned to normal since late February, furthermore transport in Shanxi and Henan has improved. Meanwhile, bauxite mines in Henan Sanmenxia and Pingdingshan have resumed mining with normal operation expected in a week. With increased resumptions of both upstream and downstream producers, domestic demand for primary aluminium will improve and raw material supply shortages will ease, in turn, weighing on alumina prices.
