A belt system at the Alumar integrated aluminum complex in Sao Luis, Brazil has failed, preventing the unloading of materials at the facility, global aluminum giant Alcoa, that manages operations at the complex, said in a statement late March 28.
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According to Alcoa, the Alumar refinery and smelter are "currently operating on existing inventories". The belt system, which typically conveys bauxite, coal, coke and pitch from the pier at the complex, has been disrupted since March 25.
Alcoa also said the pier was not damaged and there were no injuries, adding that investigations are ongoing to determine the timeline for repairs.
"We do not know the extent of any potential impacts to shipments at this time as the investigation continues," a source at Alcoa said.
Another source familiar with the matter said that the incident "seemed to have spooked a few players" in the alumina market, pushing them to seek cargoes following the Alumar incident and a recently concluded spot deal involving Brazilian alumina.
S&P Global Commodity Insights reported on March 28 that a deal for 30,000 mt of Brazilian alumina was done at $395/mt on an FOB Vila do Conde basis. The cargo was to load in June with payment due 30 days after bill of lading.
Platts, part of S&P Global, assessed benchmark Australian alumina at $363/mt FOB March 28, steady on the day, while the weekly Platts-assessed Atlantic Differentia Brazilian premium stood at $23/mt on March 23, putting the implied FOB Brazil alumina price at $386/mt.
Several market participants were of the view that FOB Brazil should be valued at a premium of $20-$35/mt to FOB Australia alumina basis this deal, but a consensus could not be reached on an outright normalization of the deal to FOB Australia levels.
"Seems like someone got very nervous in the Atlantic [basin] given the Alumar situation," a trader based in the West said.
A producer, who saw the AD premium at $20/mt, said: "The freight penalty isn't nearly as high right now".
Another Western trader, who expected the AD premium to spike to $30/mt, opined that the Alumar incident would likely "keep the Atlantic players on their toes".
The 3.5 million mt/year Alumar alumina refinery is jointly owned by Alcoa World Alumina and Chemicals, which holds a 54% stake, South32 a 36% interest and Rio Tinto a 10% share. AWAC is 60% owned and managed by Alcoa, and 40% owned by Alumina Limited.
The alumina produced from the refinery is exported through the Alumar port and supplied to the co-located Alumar aluminium smelter, according to information on South32's website.
The aluminum smelter has three potlines with a total operating capacity of 447,000 mt/year, and is 60% owned by Alcoa and 40% owned by South32.