SMM Analysis: Alumina price to edge down further
Market participants have expected alumina prices to rebound following some production cuts due to shortage of natural gas. However, SMM believes alumina price is only likely to go down slower than all the way back up.
Four alumina plants, including that of China Power Investment Corp in Shanxi province, were affected by the shortage of natural gas and a total of 2.29 million mtpy of capacity were impacted, SMM understood. The common feature of these four plants is the usage of natural gas as the major gas source.
While alumina output has been compromised, production of aluminium hydroxide has been unaffected.
In addition, most other alumina plants in Shanxi and Henan provinces have other sources including coal gas to replace natural gas. A large scale of production cut is therefore unlikely.
While lower inventories have supported alumina prices in the short term, SMM believes alumina price is unlikely to rebound further.