Chinese alumina prices to move up steadily in H2 2020

Asian Metal: Hello Mr. Zhao! Thanks for accepting the interview. Please briefly introduce your company.

Zhao: We are a wholly-owned subsidiary of Beijing Xinheng Group. Located in Dalate, Inner Mongolia, our alumina refinery mainly uses imported gibbsite hydrargillite or boehmite bauxite producing metallurgical alumina, as well as diaspore bauxite, with a total annual production capacity of 1 million tons. Our current operation remains at 500,000tpy.

Asian Metal: How about your operation over the past year?

Zhao: We enjoyed a stable operation last year, and our total alumina output achieved around 360,000t in 2019.

Asian Metal: Does the spreading Covid-19 epidemic affect your operation?

Zhao: The entire industrial production, including aluminum industry, was strongly impacted by the virus, which results a large price fluctuation for alumina and aluminum. Aluminum prices saw a dramatic increase over the past two months. However, alumina prices still stayed below the breakeven line of most alumina plants. Only the logistics was not smooth in a short time, while we kept a stable production during the epidemic period.

Asian Metal: How about the alumina market in North China over the past half year?

Zhao: Most alumina plants were forced to cut production by the sluggish market and tight raw materials supply in H1. Beside, most enterprises made no money during the first half of this year. As Chinese domestic bauxite prices went down on account of the slack market, some alumina plants who use imported bauxite conducted technical maintenance to change using domestic bauxite for the lower production cost. Generally speaking, the alumina market maintained dim in H1 this year.

Asian Metal: What's your strategy for the hard market situation?

Zhao: We kept making effort on the technical upgrading to control the production cost and increase the efficiency over the past two years, and got a success on controlling the impact on the production caused by the high organics content of imported bauxite. We ensure the sales market by good quality of alumina products with low impurity content (-45μm<18%, SiO2 0.007%, Fe2O3 0.008%, Na2O 0.03%, Li 0.0005%), which below the GBT standard.

Asian Metal: The alumina import volume saw a large growth in H1 this year. Are there any affects on your sales?

Zhao: The large alumina import volume do shocks the domestic market. However, we mainly sell our products to aluminum plants in Baotou, Erdos, and western part of Inner Mongolia, while most imported alumina were consumed by aluminum plants in the East of Inner Mongolia. Besides, the quality of our alumina products is in line with imported alumina. Therefore, our sales were little affected by the import market.

Asian Metal: What's your expectation on the alumina and aluminum market in H2 this year?

Zhao: In H2 this year, most new aluminum projects in Southwest China would put into production gradually, while the downstream consumption sees limited improve. The supply would keep excessive, which might weight on the aluminum prices. On the other hand, alumina prices should increase to make sure most alumina enterprises could maintain operation. However, there is also little room for alumina prices going up sharply. In my opinion, alumina prices would be in a steady rise in H2 this year.

Asian Metal: How about your development plan for the coming few years?

Zhao: If the market turns better, we would launch the entire 1 million tons per year of production capacity in the coming few years to guarantee a lower production cost.

Asian Metal: Thanks for your share and wish you a prosperous business!