Cnal News
Raw material supply shortages as a result of the COVID-19 pandemic curtailed domestic alumina capacity by 6.08 mtpy as of early March 2020. Average daily alumina output dropped to 171.5 kt, falling by 16.5 kt from the pre-CNY holiday period. Prior to the CNY holiday (23rd January 2020), most refineries in Shanxi and Henan held bauxite stocks capable of sustaining operation for one month, with a few having stocks for only two weeks. Most local bauxite mines were unable to restart operations until workers returned in early March, resulting in a short-term bauxite shortage. Some Shanxi and Henan refineries have begun using imported bauxite on tightening local supply, however imported bauxite is unlikely to replace domestic bauxite in the short-term as HT/LT conversion of production lines is necessary to meet the processing requirements of imported bauxite. 10.45 mtpy of alumina capacity has undergone HT/LT conversion – 27.1% of the combined amount in Shanxi and Henan. Hence the majority of local refineries in Shanxi and Henan are still reliant on domestic bauxite.
Overall alumina supply (domestic supply and imports) is expected to rise in the short-term in the wake of improved logistics, rising restocking needs, strong will for refineries to sell, and rising spot alumina prices. On the demand side, domestic daily demand for alumina in smelting averages 194.1 kt, showing a deficit of 22.6 kt per day at present.
Domestic alumina prices have been on the rise, lifting from RMB2,450/t prior to the CNY holiday to RMB2,550~2,600/t at present.
