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Global alumina prices drop below pre-Alunorte closure levels; oversupplied market and slow demand to keep prices low

The global alumina market is mostly driven by Australia, Brazil and China alumina market. Australia and Brazil are the two main alumina suppliers in the world after China.  China drives the alumina market both as a producer as well as a consumer. Alumina prices have been on a steady downward trend in recent months as the supply is comfortably surpassing demand following the restart of full production at the Alunorte alumina refinery and the lifting of US sanctions on Rusal.

Alumina price movements are primarily directed by three benchmark prices of the prime alumina producing region:

The Australia FOB Price ( Also known as Alumina Price Index)

Brazil FOB Price ( Also known as Atlantic Basis Price)

China Domestic price

Alumina prices in all three major regions are now below their pre-Alunorte closure levels. According to Shanghai Metals Market, metallurgical-grade alumina production stood at 5.76 million tonnes in June, down about 1.7% from 5.86 million tonnes in May and 3.42% from June 2018. Production of alumina stood at 34.8 million tonnes in the first six months of 2019, up 1.33% from the same period in 2018. Expanding production and new capacities have boosted Chinese

alumina production leading to a price drop.  

AUSTRALIA FOB

Australia FOB Price

Average alumina prices in four major China markets have registered a drop on Friday, 12 July to stand at RMB 2607 per tonne or about US$ 380 per tonne. The Australia FOB Price or the Pacific region price is trading at around US$310 pertonne. Brazil FOB price or Atlantic Basis Price stands at around US$300 per tonne.

Most of the buyers are relaxed as there is enough supply and more cargoes coming in every day. Buying is slow as no new aluminium capacity is coming up in China and aluminium demand is depressed in the Chinese market. Economic uncertainties due to the US-China trade war and the UK's delayed exit from the EU have resulted in cautious investments for business owners and investors.  

With Alunorte being out in the action and the general lacklustre aluminium demand at present, alumina prices are not likely to see any significant upward movement during H2 2019.


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