ALUMINA ROUND-UP: High liquidity supports fob Australia price around $277/t

Fastmarkets calculated the benchmark daily alumina index, fob Australia at $278.25 per tonne on Friday, down from $277.14 per tonne on Thursday. It has hovered between $277 and 278 per tonne over the past week.

Key drivers: 

• Demand remains strong from China. Over the past two weeks, more than 125,000 tonnes traded on cif China basis at $302 and $303 per tonne. Market participants assess the freight netback to fob Australia at between $23 and $25 per tonne. 
• Fob Australia deals have also concluded between $277.50 and $281 per tonne. The deals have supported prices from dropping any further than $277 per tonne. 
• The alumina market remains oversupplied with a number of unplaced cargoes ready for loading between now and the beginning of 2020. 
• Extra supply is coming from Hydro’s Alunorte refinery in Brazil which is now producing at nearly full capacity. As well, EGA’s new refinery in Abu Dhabi started production in April and is expected to produce more than 1 million tonnes of alumina by the end of 2019. 
• Aluminium demand is poor and London Metal Exchange prices remain low at around $1,730 per tonne. This is also putting bearish pressure on the alumina market.

Key quotes:
“There is nervousness in the market because we are already pricing at a number way below where most thought the floor was. The positive is that there is a lot of liquidity and we seem to be holding firm between $277 and $280 per tonne” – producer 1
“China has taken a lot of the excess cargoes. I have been surprised by the amount of China deals but they cannot mop up our extra material forever. There is only so much they can take into those ports” – trader 1
“The thing keeping people up at night is the fact that aluminium demand is so poor. That isn’t helping anybody and it is a big concern, the aluminium market is terrible. How can the alumina market see any light when it is reliant on the aluminium market perking up?” – trader 2

LME alumina futures contract: 

• On Thursday, there were several deals on the London Metal Exchange’s cash-settled alumina contract, which is settled against the Fastmarkets index in a basket. 
• Ten lots traded at $284 per tonne for November 2019. There were also two separate trades on the January 2020 contract at $294 per tonne for 10 lots each. 
• Earlier on Friday, there were bids of 20 lots each for $280 per tonne on the December 2019 date and at $288 per tonne for February 2020.