Zibo XiangRun Environment Engineering Co., Ltd.From the enf of August, the alumina market always hear the price rise. What reason is it to lead continuously rising. In here, we will introduce alumina market.
Alumina is an indispensable link in the process of preparing aluminum. The price change of alumina directly affects subsequent aluminum prices, electrolytic aluminum and market changes. Correspondingly, changes in market factors will also restrict alumina.
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So, what are the reasons for the continuous increase in alumina prices?
Reason 1: Environmental protection
At present, environmental protection has always been an issue of concern to the Party Central Committee and the people. In the long run, the country's requirements for environmental protection will become more and more stringent. When it comes to alumina, we have to mention electrolytic aluminum. Alumina and pre-baked anodes are raw materials for the production of electrolytic aluminum, and their production emits pollutants. Therefore, relevant companies will be restricted by environmental protection policies. In 2018, the domestic alumina production capacity can meet the demand for electrolytic aluminum, but environmental protection is still an important factor restricting the start of its enterprises.
Reason 2: Import
Due to the continuous growth of alumina production, the demand for bauxite has increased substantially. The global bauxite resources are very rich, but the distribution is extremely uneven. Among them, the reserves of Guinea, Australia, and Brazil together account for nearly 60% of the global reserves. China's bauxite resources are relatively small, coupled with China's large demand, which requires a large amount of imports of bauxite. China is currently Brazil's largest bauxite exporter. Brazil exported 3.3 million tons to China in 2017, accounting for 37% of Brazil's total exports.
Reason three: heating season
With the coming of the later heating season, electrolytic aluminum and alumina production enterprises are the focus of production restriction. After the corresponding production capacity is reduced, the consumption of inventory will also accelerate, so the gap between supply and demand of alumina in the market will be further expanded. As a result, most traders have prepared stocks in advance, and market demand has started to increase accordingly, which has promoted further increases in alumina prices.
Reason 4: supply and demand
The cost of alumina accounts for approximately 28%-34% of the production cost of aluminum ingots. Due to the high concentration of the international alumina market, most of the global alumina (80%-90%) is sold through long-term contracts, so there is very little alumina available for sale in the spot market.
In recent years, the continuous expansion of China's electrolytic aluminum production has led to a continuous increase in domestic demand for alumina. At present, about two-thirds of imported alumina needs to be purchased from the spot market. China's large purchases of alumina in the international market have directly promoted the substantial increase in international alumina prices.
Reason five: production reduction
Hydro’s Alunorte alumina refinery reduced its production by 50% (designed annual production capacity of 6.3 million tons/year, and annual output of about 6 million tons in 2017, accounting for about 10% of global alumina production excluding China). Affected by this, overseas The supply shortage in the alumina market is expected to stimulate prices to keep rising.
Reason 6: Rusal incident
From the perspective of the distribution pattern of RUSAL's production capacity, the alumina sector accounts for the largest proportion of overseas capacity, about 74% (electrolytic aluminum and bauxite sector accounted for 15% and 62%, respectively). Therefore, the market pre-alumina bears the brunt. Affected by this, overseas alumina prices have skyrocketed, and the domestic alumina export window has gradually opened, aggravating the domestic alumina shortage pattern and stimulating the domestic alumina price to rise sharply.
Summarize:
Internationally: The strike at Alcoa's alumina plant in Australia, the suspension of production at the Hydro alumina plant, and the sanctions imposed on Rusal have resulted in the continued tightness of overseas supply.
Domestic: The cost of alumina production is increasing. On the one hand, environmental protection and security inspections affect domestic mine supply, and mine prices have risen significantly. On the other hand, the proportion of ore used by domestic alumina plants has gradually increased, and the cost of imported ore has even doubled compared with domestic ore. The proximity of the heating season, environmental protection policies and other factors have led to an increase in alumina prices.
