Metal Bulletin’s daily fob Australia alumina index ended the week at $370.60 per tonne on February 9, down from $385.50 per tonne at the start of the week. 

Prices were relatively stable between January 11 and February 5, when the index was settled in a range of $381.16-385.50 per tonne.

The market has been underpinned by strong aluminium prices and far from abundant spot cargoes. But demand has been subdued, with Chinese market participants preferring to buy local stocks, which have been trading at a discount relative to seaborne cargoes, while smelters elsewhere have been well stocked.

“It had been feeling like it was going to come off, but spot trades have been thin until now. It has been coming but people are nonetheless shocked,” a trader said.

The past week saw Indian alumina trade in the spot market in the low $370s per tonne.

Chinese demand for alumina remained weak in the run-up to the Chinese New Year holidays, and therefore likely to remain so over the coming days, despite the fall in the spot market.

In addition to being well stocked, ex-China buyers with March as the end of their financial year are keeping out of the market in order to keep their stocks low ahead of the year-end.

Despite the weak demand profile, strong prices for aluminium, and tightness for Australian units, limited the decline in prices last week.

The three-month aluminium price on the London Metal Exchange closed last week at $2,144 per tonne. Prices have fallen steadily since the start of the month, but are nonetheless still strong compared with $2,005 per tonne two months ago.

“The tightness in the spot market for prompt Australian alumina specifically is also underpinning the price,” a second trader said.

“February tonnes have been sold out for a while. It looks like there might be some availability for late March loading, but smelters are buying time on that and assessing their needs,” a consumer added.

And while market participants were largely in agreement that prices had fallen and had been due to do so, they added that it would be difficult to make a call on where prices are heading until China returns from its new year holiday.

“If I was a seller, I would wait 10-15 days to see what China was doing, before committing to anything,” the consumer said.