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Watch: Turbulence in the alumina market; when will the dust settle?

The alumina market in 2018 has been especially turbulent due to supply shocks in Brazil, Australia, and Ireland, and there are signs the volatility may remain through the end of the year. Supply shocks earlier in the year sent prices upwards when the Alunorte refinery in Brazil cut operations due to environmental disputes with authorities. More trouble surfaced in April when the US imposed sanctions on Rusal. Outside of Russia, Rusal produces alumina in Australia, Ireland, Jamaica and Guinea.

Now, as we approach the last two months of 2018, not only are the issues at Alunorte and Rusal yet to be resolved, there are more potential headwinds on the horizon. S&P Global Platts Joanna Lim, senior alumina editor, reports on these concerns and how uncertainty in China could drive the alumina price in either direction.

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Welcome to The Snapshot, a series examining the forces shaping and driving global commodities markets today.

The alumina market has been especially turbulent this year, due to supply shocks in Brazil, Australia, and Ireland, and there are signs the volatility may stay with us through the end of the year.

Let's take a look at what's been shaking up the market.

Earlier, supply shocks in March and April sent prices upwards when the Alunorte refinery in Brazil cut operations due to environmental disputes with authorities. More trouble surfaced in April when the US imposed sanctions on Rusal.

Outside of Russia, Rusal produces alumina in Australia, Ireland, Jamaica and Guinea. Now as we approach the last two months of 2018, not only are the issues at Alunorte and Rusal yet to be resolved, there are more potential headwinds on the horizon.

Essentially, uncertainty lies in China, which could drive the alumina price in either direction. One the one hand, China has 5-6 million mt of new alumina capacity slated to come online in coming months.

But there is no clarity on China's environmental conservation regulations during the winter months. Last year, authorities asked heavy polluting industries to wind down plant operations between Nov and March, the heating season.

But there has been no similar call to action for the coming winter. And if China's alumina and aluminum production are allowed to proceed unhindered, China will be in a position to export plenty of alumina.

Until last year, China was traditionally a net importer of alumina, sourcing about 3 million tons/year from Australia and other Asian origins. In the last two months alone, China exported more than 200,000 mt of alumina.

And for the year to date, exports are over half a million mt. Should exports continue at the same rate, it would help ease tight conditions in the international market, and cushion further price increases.

Until next time on the Snapshot, we'll be keeping an eye on the markets.