Aluminium restarts offer dilemma for alumina prices

摘要

With Brazil restarting a large bulk of its idled aluminium smelting capacity, and the US likely to follow suit, led initially by potential restarts eat the Longview and Columbia Falls smelters, there has suddenly appeared the prospect of a tightening in alumina supply. If a significant proportion of the US idled capacity is brought back on stream this year we can certainly expect the outlook for the alumina market to improve rapidly. However, this does not necessarily mean good news for the alumina producers given the link between alumina and metal prices. The idled smelting capacity is currently over-hanging the market and as it is brought on stream it looks set to have a negative impact on metal prices in the absence of a rebound in metal demand.As a result, contract alumina prices are unlikely to see much improvement in the short-term. It should, however, provide alumina producers with the ability to negotiate contracts closer to the 12 percent of LME metal price market rather than the levels closer to 10 percent that would otherwise have probably been more realistic in the absence of the restarts. Current spot prices have not yet seen any improvement and offers for Caribbean material are currently being made n the range of 140-150 dollars/tonne fob.