Domestic Alumina Price Jump Upward Continuous Repair of Profit of Electrolytic Aluminum

On May 16, Aladdin Alumina spot quoted 3,050 yuan/ton, up 8.5% this week, showing a jump upward trend, and this price has increased by 14.5% compared with the bottom quoted price of 2,665 yuan/ton on April 15. 

Domestic alumina prices continued to be in the downward channel from the stage high of 3340 yuan/ton in mid-September last year. Alumina prices began to rebound after the end of mid-April this year. The logic of the rebound is mainly due to the continuous shortage of bauxite supply in Shanxi, which accounts for about 30% of the total domestic production capacity of alumina, and the production cost of alumina is at the right end of the whole cost curve, thus pushing up the initial rebound of alumina price.

The recent jump in alumina prices is due to the impact of the leakage of red mud reservoirs in Shanxi Province. On May 7, the Jiaokou County Government set up a Joint Verification Working Group to carry out the verification work on the leakage of red mud reservoir in Shanxi Jiaokou Xinfa Aluminum Plant. Shanxi Jiaokou Feimei Aluminum Industry Co., Ltd. is a subordinate enterprise of Shandong Xinfa Aluminum Power Group and a large private enterprise attracting investment in Jiaokou County. According to media reports, there are cracks on the dam surface of the red mud reservoir of the alumina project, and the leakage of alkali liquor seriously pollutes the environment. At the same time, it causes the fear of dam break. Official notification shows that the enterprise has issued a stop-production order, the enterprise's 2.8 million tons of alumina production capacity is being rectified as required, the time for resumption of production has not been determined, follow-up market dynamics still need to be observed. Aladdin data show that the total domestic production capacity of alumina is 83.97 million tons and 69.61 million tons as of March. The shutdown capacity of the alumina project at Jiaokou in Shanxi accounts for 3.3% of the total production capacity and 4% of the total production capacity.

In addition, due to the impact of environmental protection issues, the General Office of the Central Ministry of Ecological Environment recently urgently triggered the "Notice on Strengthening the Overall Supervision of Eco-environmental Protection in 2019 (the first round)". The Central Ministry of Ecological Environment will deploy 23 people to carry out the Overall Strengthening Supervision (the first stage) in Shanxi from May 15 to 25, followed by the inspection of alumina plants in Shanxi. And the impact needs close attention.