China's spot alumina prices were rangebound Monday despite the world's largest producer Shandong Hongqiao reportedly cutting 2.68 million mt/year of primary aluminum capacity, multiple market participants said.
Talks of the cutbacks have been ongoing in recent weeks and doubts remained that Hongqiao would cut as much as stated, with part of the cuts likely to consist of idled capacity, sources said. (See related story published at 0920 GMT).
Platts China ex-works Shanxi daily spot alumina was assessed at Yuan 2,470/mt ($371/mt) cash Monday, unchanged from Friday, but down Yuan 10/mt on the week and down Yuan 50/mt from a month ago.
"They've been talking about the cuts for so long now, and even if they announced them officially, we can't fully trust they will cut that much in actual fact," a Sichuan smelter said. "Ingot prices are strong... they will stall as long as possible and produce to stock up as much as possible before actually cutting."
A Shanxi refiner agreed, adding that it "isn't possible to cut so much [2.68 million mt/year] overnight, even in two to three days, it takes time ...just look at alumina and metal prices today, and you can see how much impact there is or isn't."
Sources said talks of Hongqiao's cuts have already been taken into account and supported metal prices earlier this month, so the market was unaffected Monday.
The front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 15,625/mt Monday, down from a five-year high of Yuan 16,020/mt on Wednesday, but up from Yuan 14,200/mt a month ago.
In the near term, the general expectation is for spot alumina prices to test lower, but downward movement would be limited.
"It's unfair to refiners when metal prices are so high ... there's also talks that Hongqiao plans to cut alumina output as well, and there's the upcoming winter cuts and seasonal year-end stock up, which can all support alumina," another Chinese refiner said.
