China's spot alumina prices were rangebound Tuesday as the market returned from an extended weekend to celebrate Labor Day holidays.
The Platts ex-works Shanxi alumina spot assessment held at Yuan 1,995/mt ($309) full cash terms, unchanged from April 29 and a week ago, but up Yuan 75/mt on the month.
In neighboring Henan province, spot alumina prices continued at Yuan 2,000-2,050/mt cash to credit terms, with Guangxi prices also steady at Yuan around 1,880/mt cash.
Spot trade activity was slow moving as market participants stayed on the sidelines awaiting clearer direction, sources said.
"It's too early to tell, we're just back today and aluminum is still volatile, so we must wait and see," a Henan-based refiner said.
A refiner in Shanxi agreed, adding that his offer level remained at Yuan 2,020/mt full credit basis Tuesday, but no trades were concluded.
Refiners' offers in Shanxi were heard between Yuan 2,020-2,030/mt full credit basis Tuesday, compared with mostly around Yuan 2,000/mt cash last week, sources said.
"There are more trades on credit now as bank interest rates have lowered, so refiners are also quoting more on credit basis than full cash terms recently," a smelter in southern China said.
"At Yuan 2,020/mt full credit, that would now mean a full cash level of about Yuan 1,990/mt... a Yuan 30 difference compared with around a Yuan 50 gap previously," he added.
Spot alumina prices are still expected to test higher in the near term as domestic aluminum prices remained firm, but movement upwards will be limited by refinery restarts, sources said.
Domestic metal prices are likely to continue seeing short-term support from falling reserves, speculation buying and lack of smelter restarts, but the longer-term outlook is less optimistic as excess capacity remains.
"Alumina will be pressured by recent refinery restarts, so they will have to depend on metal prices for support. The metal market can probably stay firm in the near term, but in the longer term, as Xinjiang smelters ramp up or idled capacities are restarted, there will be pressure on metal as well," the South China smelter source said.
A Beijing-based trader agreed, adding that "there's too much uncertainty still, we want to wait for more stability."
The front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 12,810/mt Friday, up from Yuan 12,740/mt on April 29, and also from Yuan 12,775 a week ago. The current price also reflected a increase from Yuan 11,850/mt the month before.
