At the beginning of 2020, domestic alumina prices stopped falling and were showing an upward trend. Before Chinese New Year (24 January 2020), local refineries in Shanxi, Henan and Shandong were required to suspend alumina calcination processing due to severe air pollution alerts, curtailing overall national output in the short-term. During the Chinese New Year Holiday (24 January 20~3 February 2020), alumina spot transactions stagnated, with prices stable at RMB2,420/t in the domestic market.
The holiday in conjunction with the outbreak of 2019-nCoV has hindered transportation – particularly by road – restricting both raw material arrivals and deliveries of alumina. As a direct result, refineries face shortages of raw materials including bauxite, caustic soda and coal, while having mounting alumina stocks. Most domestic refineries have to operate from previously stocked raw materials and some have to curb or suspended operations. Total affected capacity is estimated at 2 mtpy, and the operational rate of domestic alumina refineries is less than 80%, a decline of 2% m-o-m.
As the import arbitrage window opened in December, China’s alumina imports surged to 444 kt in December 2019, weighing on the domestic market. However, transportation from ports to refineries has also been interrupted, seeing port inventories mounting to 700 kt at present.
Antaike analysts take the view that an increasing number of refineries will be forced to cut operations as the epidemic period continues and, as a result, shrinking supply is likely to prop alumina prices in the near-term.