The recent rally in alumina prices was on the back of a fire at the Jamalco refinery in Jamaica which ignited worries of tighter supply of the aluminium raw material. The Jamalco plant can produce up to 1.4mnmt per year of alumina, which is refined from bauxite, shared Prathamesh Mallya, AVP- Research, Angel Broking.
Global alumina production in 2020 was 134.4mn mt, according to the International Aluminium Institute. Worries over shortage of primary raw material amid disrupted supply of aluminium from major producing nation China might continue to support higher aluminium prices in the near term.
Aluminium prices remain elevated despite weak demand from China, shared Yash Sawant, Research Associate, Angel Broking. LME Aluminium prices are up by over 28pc in 2021, recording the highest gains amongst its peers. Production uncertainties for aluminium persist as stern environmental norms in major producer country, China, continue to hamper smelting operations.
Following the additional energy usage limitations imposed recently in China’s Yunnan province, which accounts for 10pc of China’s aluminium output, along with Inner Mongolia, Guangxi, and Guizhou, officials in Xinjiang regions have ordered five Aluminium smelters to limit their output from Aug 21 in order to avoid illegal production. China’s Xinjiang region accounts for about one-fifth of China’s Aluminium output.
In July 21, China’s Aluminium imports of unwrought Aluminium and products stood at 312,086mt which was 6.1pc up from the previous month, data as per the General Administration of Customs. The low domestic supply of aluminium has led to an increase in China’s aluminium imports. In the first seven months of 2021, China’s aluminium purchases were up by 47pc compared to a year ago.
That, coupled with the continuous withdrawals of aluminium inventories from the LME monitored warehouse further signaled towards a tighter supply market. LME aluminium inventories are down about 30 percent since March this year.
On Thursday, LME copper ended lower by 0.6pc to close at $92,99.5/mton a stronger dollar amid easing supply worries that pressured the prices.
Chilean miner Codelco, the world’s largest copper producer, reached an agreement on a new contract with supervisors at its Andina mine. Andina produced 184,000mt of copper in 2020, around 10pc of Codelco’s total output.
On Thursday, industrial metals ended lower as the dollar strengthened ahead of US Fed Chair Jerome Powell’s speech at a symposium on Friday, Aug 27.