Sina Finance News
Aa port inventory:
Alumina inventory at Chinese ports totals 882 kt, with 60 kt at Lianyungang Port, 460 kt at Qingdao Port, 37 kt at Rizhao Port, 190 kt at Bayuquan and 135 kt at ports in Guangxi. New alumina arrivals in February 2020 are expected to be 150 kt. Destocking and delivery has been slow due to the current situation of restricted logistics.
Aa inventory at refineries/smelters:
Alumina refineries in Shanxi and Henan face mounting inventories as a result of restrictions in cross-province truck transport, whereas alumina previously stocked at railway platforms can still be railed to northwestern China.
In Xinjiang, truck transport from Xinjiang warehouse to aluminium smelters has faced difficulties, and local smelters face rapidly declining inventories and short-term alumina supply shortages.
In Guangxi and Guizhou, despite cross-province truck transport restrictions, inner province transport is fine and inventory at local refineries are stable.
In Shandong, restrictions on truck transport in Bizhou have been strict, but the overall logistics pressure on Shandong refineries is relatively small seeing alumina stocks at normal levels locally.
Bx inventory at refineries:
Before the Chinese New Year Holiday (24 January 2020), refineries in Shanxi and Henan had bauxite inventories capable of sustaining approximately one-month’s operation, showing a decline from the previous two months. At present, some alumina refineries have bauxite inventories for only two weeks of operation as a result of restricted road transport and the extended holiday mandated by the government due to the 2019-nCoV outbreak. Some domestic refineries face a severe deficit of liquid caustic soda supply as most is typically transported by truck from caustic soda producers nearby, seeing affected refineries having to cut operation by 30~50%. If restrictions on road transportation continue going forward, an increasing number of local refineries are likely to cut operations – with some news of suspensions already reported.
Logistic costs:
Road transportation costs are likely to surge rapidly during the epidemic period. Road transport costs from a refinery to a smelter are typically RMB45/t, but are now RMB135/t. The surge can be mainly attributed to the limited number of trucks and drivers available due to the extended Chinese New Year Holiday, restrictions to cross-province road transportation and city lockdowns as well as increasing costs from trucks being empty on the return trip. In normal circumstances, trucks pick up coal on return trips after alumina deliveries, but such jobs are currently scarce.
