Column: Mind the alumina gap as Western and Chinese prices diverge – by Andy Home (Reuters U.K. – October 10, 2019)

LONDON (Reuters) – The alumina market is currently seeing a widening gap in pricing between China and the rest of the world. Outside of China the price of the aluminium input has fallen below $300 per tonne for the first time since the second quarter of 2017.

Last year’s explosive rallies above $600 per tonne are a distant memory as the full return of the giant Alunorte refinery in Brazil stabilises supply. In China, by contrast, local prices have rallied by 10% over the last two months to a current 2,650 yuan ($365) per tonne, according to Shanghai Metal Market.

The Chinese supply chain is proving more unpredictable this year with domestic production hit by unforeseen outages, environmental curtailments and declining raw material availability. Divergence between Chinese and Western alumina prices is not new but they tend to move broadly in tandem not in completely different directions.

Increased Chinese imports should in theory rebalance the global market and close the price gap. However, that has not happened yet and this divergence may turn out to be more structural in nature.

Last year’s turbo-charged alumina price rally was triggered by the partial closure in February of Alunorte after an alleged tailings dam spill and exacerbated in April by U.S. sanctions against Russian producer Rusal.

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