The price of Australian alumina has broken

The price of Australian alumina has broken four months of price increases, falling $8/mt in the last two weeks to be assessed at $255.50/mt FOB Western Australia Tuesday, according to S&P Global Platts data.

Prices climbed $64.50/mt between January and early May in response to alumina refining cuts in China and the Americas, driven by poor margins.

The cuts also came at a time when India and Malaysia were boosting alumina imports to support increased domestic aluminum production.

But since February, China has ramped up 6 million-7 million mt/year of alumina refining capacity, and 500,000 mt/year to 1 million mt/year of aluminum smelting capacity, according to Platts estimates, in response to stronger margins.

With alumina output now growing at a faster pace than aluminum, sellers are having to discount their stock. On Tuesday, a stockholder confirmed granting a $1-$2/mt discount to secure a quick sale.

As there is no shortage of alumina, consumers are holding out for bargain buys, market participants said in the last week.

The price spread between Australian alumina and Chinese domestic material has narrowed as well, with Australian units fetching a premium of $13/mt or Yuan 86/mt on Tuesday in import parity terms, compared with supply from Shanxi province.

The Australian premium reached a year-to-date high during the first two weeks of May at $20/mt and Yuan 133/mt.

Australian alumina typically commands a higher price than Chinese alumina due to its higher purity, and also because China is a net importer, typically sourcing about 5 million mt/year from offshore.