Commentary: Alumina wake-up call for the aluminium supply chain – by Andy Home (Reuters U.K. – October 15, 2018)

LONDON (Reuters) – The alumina market is experiencing a year of unprecedented turbulence. Alumina, which sits in the aluminium production process between bauxite and refined metal, has historically been a highly efficient link in the supply chain.

It hasn’t generated many headlines over the years because it has largely avoided any newsworthy disruption. It is, to quote Greg Wittbecker, analyst at the CRU research house, one of those markets “people have taken for granted”.

Not any more. A series of supply hits have sent the alumina price on a rollercoaster ride this year, at one stage threatening the closure of several European aluminium smelters. This volatility poses some hard questions for aluminium producers, not least as to how alumina is priced.

Alumina’s year of turmoil began in February, when a Brazilian court ordered the part suspension of Hydro’s Alunorte refinery after heavy rains raised concerns about leakage from the plant’s tailings ponds.

Alunorte, with capacity of 6.3 million tonnes a year, is the world’s largest single alumina production site and has been operating at half capacity ever since.

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