Sydney — The Platts Australian alumina daily assessment leapt $160/mt on Wednesday to $710/mt FOB, driven by acute supply worries.
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A 30,000 mt Brazilian parcel was reported to have traded on Wednesday at $800/mt FOB with 30 days credit, for shipment in early May.
In recent weeks, market participants have said they would expect prompt laycans to be priced above cargoes loading in the next 30 to 60 days, due to tight supply. But even so, the traded price elicited a strong reaction on Wednesday from market participants, with a notable number saying it was far above what they anticipated.
Earlier in the day, market participants had indicated tradable value at around $590/mt FOB Australia for alumina cargoes aligning to Platts methodology.
After market participants became aware of the Brazilian trade, sources put tradable value at $700-$760/mt FOB Australia.
Sources said the price of alumina has escalated at a rapid pace rarely seen, due to a severe lack of supply.
"I think in today's market, people pay any price for anything," a source said. "The Rusal thing has thrown the market in chaos. It is not a normal market".
"It's a crazy price...[but] no one else has anything," another said.
"It's dramatic. There's literally nothing available..smelters globally are on their knees...It's an unprecedented situation in the global industry," said a third.
US sanctions on Russian aluminum producer Rusal since April 6 have escalated global alumina supply worries, adding to deficits already created by Alunorte's unplanned output cut of 50% in Brazil since March 1 due to environmental breaches, and subsequent force majeure declaration. Alunorte's run cut is expected to remove about 242,000 mt/month of alumina from the market.
Rusal produces alumina in Australia through its joint venture with Rio Tinto, Queensland Alumina Ltd. Rusal's share of the plant's output is typically shipped to Russia for its smelters, supplemented with further purchases from Australia through term contracts and the open spot market.
In addition, Rusal produces alumina in Ireland and Jamaica, which is exported to third parties, who regularly direct the tons to Africa, Canada Iceland and Europe.
Alunorte is the world's largest alumina refinery, with a nameplate capacity of 6.3 million mt/year and typically turns out about 5.8 million mt/year.
The refinery supports the 45,000 mt/year Albras aluminum smelter in Brazil, and in addition Alunorte exports sizable volumes of alumina to Africa, Europe, Russia, the Americas, and the Middle East.
The Albras smelter has halved its output due to lack of alumina. In recent weeks, sources have also noted that other smelters in Africa, the Americas and Europe have run down their alumina inventories.
The Platts Shanxi daily assessment rose Yuan 50/mt ($7.96) on Wednesday to Yuan 2,900/mt ex-works in cash, pulled up by an upswing in aluminum and international alumina prices. There is no shortage of alumina in China and a number of refineries have expressed interest in exports, sources said in recent days.
Historically China has rarely exported domestic alumina due to deviations in chemical specifications. But with supply jitters escalating in the international market, market sources have said it may not be long before exports start to take place.
India's Nalco has floated a sell tender for a 30,000 mt alumina shipment between May 10-14, FOB Visakhapatnam LC at sight. The closing date is April 19 with bids required to be valid until April 23.
Vinacomin of Vietnam closed on Wednesday a tender offering a 20,000 mt cargo with tentative laydays of June 1-7, FOB Go Dau LC at sight, with maximum guaranteed fines (-45 micron) of 12%. The tons may be shipped in bulk, or bags containing 1 mt each, at the buyer's option. The deadline for bids was about one and a half hours before the Brazilian trade at $800/mt FOB become public knowledge.
--Joanna Lim, firstname.lastname@example.org
--Edited by James Leech, email@example.com