China alumina price hits fresh all-time high, set to remain elevated in near term

China’s alumina spot prices hit a fresh all-time high Oct. 15 led by bauxite supply disruption out of major exporter Guinea and strong downstream demand, with industry sources expecting the momentum in alumina prices to continue in the coming months.

Platts, S&P Global Commodity Insights, assessed Chinese domestic alumina at Yuan 4,450/mt ex-works Shanxi Oct. 15, up Yuan 50 on the day and Yuan 460/mt from a month earlier, hitting the highest level since Platts started the assessment in August 2010.

Futures prices reflected the bullish market sentiment, with the November contract on the Shanghai Futures Exchange breaching the daily trading limit of 7% on Oct. 14 to hit Yuan 4,818/mt ($677/mt) -- the highest level since the alumina futures were launched on SHFE in June 2023 -- before easing back 1.2% to close at Yuan 4,688/mt ($659/mt) on Oct. 15.

Driving factors

Supply from Guinea, the largest bauxite supplier to China, has been hit by disruptions over the past few months, first due to unfavorable weather conditions but now due to exports being blocked by Guinea’s customs authorities.

“We can confirm that exports of bauxite from Guinea Alumina Corporation (GAC) are currently suspended by customs. We are seeking clarity from customs on the reason for this action, and are working to resolve this as quickly as possible,” GAC's owner Emirates Global Aluminium said in a statement to Commodity Insights Oct. 14.

GAC exported 14.1 million wet metric tons of bauxite in 2023, according to the company's website.

The company said production at its Al Taweelah alumina refinery in the UAE, which uses raw materials from GAC, continues as normal and that it does not foresee any impact.

Meanwhile, domestic bauxite supply in China has been tight amid strong downstream demand and limited growth in production.

Sources said that aluminum smelters in Yunnan province may not be ordered to curb production by authorities over the rest of this year given good water availability, meaning they could keep pumping up production at a time of decent profit margins.

According to state-owned research agency Antaike, profit margins for Chinese smelters could remain above Yuan 2,000 ($281)/mt in October, after September margins rose 12.2% from August levels.

The absence of import arbitrage opportunities is also drying up supplies in China.

Australian alumina prices have remained higher than Chinese domestic prices since May 28, and the delta widened in September, indicating imports of alumina into China remained unprofitable, according to Commodity Insights data.

Australian alumina was about $141 per metric ton higher than Chinese production on theoretical import-parity terms on Oct. 14, based on Platts assessments of $645/mt FOB Australia, Yuan 4,400/mt ex-works Shanxi and a freight rate of $26.5/mt to ship 30,000 metric tons from Western Australia to Lianyungang, China.