Alumina prices rise by multiple factors

Since the beginning of this year, the prices of most non-ferrous metals have reached a new high in nearly a decade, and the commodity supercycle is constantly being heard. 

Alumina, as a key raw material for electrolytic aluminum production, did not keep up with the rising pace at the beginning of the year, but since may, the price of aluminum oxide has maintained a rising trend, and the rising cycle of nearly four months is rare in the previous price trend. This round of rising cycle as a whole reflects a long period of time, the characteristics of the flat rise.

The price of alumina to maintain the rising trend of the main factors are as follows.

First, high commodity prices run, the market will continue.

Intuitive view, all kinds of industrial products prices are compared to the 2021 has a substantial increase, with the domestic economic recovery, consumer good, combined with the double carbon targets, double energy consumption control policy and a series of factors such as peak power utilization measures, commodity supply tightening is expected to remain strong support in the first half of the majority of production material prices.

Due to the high price increase in the upstream industry, the domestic government has introduced a series of measures to ensure price stability and promote price stability.

In the future, due to the supply disturbance caused by the repeated outbreak, the tight supply of bulk commodities will keep the prices of relevant commodities running at high levels. However, the price increase of commodities is expected to be controlled within a reasonable range under the main market tone of guaranteeing stable supply and price.

Second, environmental supervision to implement the rectification pressure.

Many coal power, coking industry enterprises in Shanxi face a deadline to rectify, ore, coal prices remain high, pushing up the production cost of alumina.

In April 2021, the second round of the third batch of environmental supervision work of the central Ecological environmental protection inspection Team was fully launched, involving eight provinces, including Jinyu area. 

On July 20, 2021, the inspection team gave feedback to the Shanxi Provincial Party Committee and the Provincial government, pointing out that although the ecological and environmental protection work in Shanxi Province has made positive progress and achievements, there is still a large gap to meet the requirements of the central government and the expectations of the people.

It mentioned that jinzhong and Luliang cities are in a serious situation of double control of energy consumption, and the problem of disordered development of mineral resources is prominent. The inspection required Shanxi Province to resolutely shoulder the political responsibility of ecological civilization construction and ecological environment protection, stressed that the rectification plan should be formulated as soon as possible and submitted to the CPC Central Committee and The State Council within 30 working days. The supervision and rectification task is heavy, the intensity is great, the current Shanxi Province coal power, coking, non-ferrous and other industry enterprises, whether completed, under construction and proposed construction projects are facing greater pressure of rectification.

Third, the power restriction policy affects alumina production.

Affected by the peak electricity consumption in summer and the policy of protecting people's livelihood, many industrial enterprises in China require to avoid peak electricity consumption by mistake.Power cuts continue to simmered across alumina producing regions including Guangxi, Guizhou, Yunnan and Henan. Learned, guangxi xinfa, actively, east hope sanmenxia aluminum because of power rationing affect production occurred phenomenon, guangxi letter sent on August 10, cut a production line, affect the production capacity of 40-500000 tons/year, actively affect the production capacity of about 600000 tons/year, east hope sanmenxia aluminum production in early August, affect the capacity of about 500000 tons/year, specific return date to be determined.

Fourth, the repeated epidemics have led to transport disruptions and increased downstream procurement intentions.

Recently, with the rise of COVID-19 in China, logistics and transportation have been limited and costs have risen.Among them, henan to Xinjiang, Jiangsu, Shanxi and other road transportation lines have been suspended, and the normal collection and transportation lines will be due to nucleic acid testing, the overall aging delay of 1-2 days. The electrolytic aluminum enterprises in northwest China are worried about the severe transportation problems in the future, so the purchasing intention is high, the stock is replenish actively, the market initiative side favors the seller, and the alumina price goes up along the trend.

In the macro overall to the good background, alumina production costs rise, tight supply is expected to strengthen, the future price of alumina will maintain the overall trend of strong upward.