Metal Bulletin’s benchmark daily fob Australia alumina index set a fresh high on Tuesday, calculated at $707.75 per tonne, up from $703.75 per tonne the previous day.

The index had dipped to $661.32 per tonne late last week after a cargo of Vietnamese alumina traded just above $660 per tonne. A shipment of Indian alumina has since traded a little below $720 per tonne, according to market participants spoken to by Metal Bulletin.

Meanwhile, aluminium prices on the London Metal Exchange have slumped from their recent highs after the United States announced it would not impose secondary sanctions on UC Rusal.

The three-month aluminium price on the LME settled at $2,223 per tonne at the end of the official session on Tuesday compared with a high of $2,587 per tonne on April 19.

Fluctuations in the light metal prices have effectively curbed more substantial gains in prices for feedstock for the time being.

“That probably takes alumina prices off on the bid side. It’s not like supply and demand has changed, but it takes away consumers’ ability to pay higher numbers,” a trader source said.

Available spot alumina cargoes remain scarce as a result of a force majeure on units produced at Hydro's Alunorte refinery, and uncertainty over availability from Rusal's refinery assets in Jamaica and Ireland.

The sharp rally in alumina prices has provided further impetus for Chinese alumina refineries to ramp up production and international traders are eyeing the prospect of exporting China-produced alumina to the international market.

The price jump in the past one week has further sped up negotiations between Chinese refineries and export traders.

Chinese refineries have offered material at about 3,400-3,500 yuan ($539-554) per tonne on an ex-works basis to export traders, according to producer and trader sources.

“The only hurdle for the export right now is how to ship the materials to ports, whether in bulk or in bags. Once this problem is solved, we will soon see exports ramping up,” a trader source said.

But not all market participants are optimistic about exporting alumina outside China, pointing out the government will intervene once the export of alumina turns into reality.

“The government won’t allow the export of raw materials,” a consumer said, adding that a tax would apply to the export once China-produced alumina flows out.