Alumina market sinks on growing supply

Global alumina prices have fallen sharply in recent months and will probably continue to do so, as supply comfortably outpaces demand following the restart of full production at the Alunorte alumina refinery in Brazil and the lifting of US sanctions on United Co Rusal.

The fate of Norsk Hydro's Alunorte facility, the world's largest alumina refinery, has dictated prices for two years. Prices were around $350/t fob before [50pc of the refinery's capacity came off line]( https://metals.argusmedia.com/newsandanalysis/article/1635797) in the first quarter of last year. Prices doubled to over $700/t as the shortage bit, exacerbated by US sanctions against Rusal owner Oleg Deripaska.

Those sanctions were imposed in April 2018, but were lifted in January this year, following a failed attempt in the US Senate to advance a resolution blocking the treasury department from lifting the sanctions.

In May, full production resumed at Alunorte after a federal court in Belem lifted an embargo.

Supply levels have been further boosted this year by expanding production in China, where additional capacity is due to come on stream from numerous companies, including Xinfa Group and Chalco. China has increased its bauxite imports this year, with May receipts rising by more than a third on the year, according to customs data.

Alumina prices are now below their pre-Alunorte closure levels, with cargoes in the Pacific region trading at around $310/t fob, and those in the Atlantic region at around $300/t fob, according to market sources.

"There is a lot of supply and not much demand," a trader said. "There was nervousness before about where you might be able to find it, but when everyone knows that more and more cargoes are coming they can relax."

After managing to maintain operations through the Alunorte closure, many alumina buyers are not in the market for fresh cargoes, with aluminium demand depressed as a result of uncertainty caused by geopolitical tension, including the US-China trade war and the UK's delayed exit from the EU.

"With Alunorte out, everyone found a way," the trader said. "Now there's 250,000 t/month back on line, and that is very significant. The price is coming off fast."