- THE MAGAZINE
The development of alumina in China is closely related to electrolytic aluminum when it comes to supply, demand and price. In general, about 1.98 tons of alumina are needed to produce 1 ton of electrolytic aluminum, thus the production scale of electrolytic aluminum directly determines alumina demand. In recent years, China has seen expanding capacity for electrolytic aluminum, which has facilitated the rocketing demand for alumina in the market and caused the subsequent alumina overcapacity.
The capacity of alumina in 2006 was less than 2000 tons, while it reached 26.53 million tons in 2007 and exceeded 30 million tons in 2008. Impacted by financial crisis, the growth rate of alumina capacity in 2009 dropped 25.3 percentage points from a year earlier. With the restart of electrolytic aluminum capacity at home in 2010, China’s alumina manufacturers are active in expanding their capacities, with the identified and newly increased capacity expecting to reach 7.9 million tons by the end of the year.
Long-term orders account for most shares of aluminum smelting factories in China; the long-term contract price is decided based on 16-17% of the three-month aluminum price of Shanghai Futures Exchange. This causes the alumina price to stray from its supply, demand and cost, and adjust with the price of aluminum. Backed by favorable policy, the aluminum price climbed in China in 2009, which spurred the price hike of alumina price. Entering 2010, the alumina experienced a V-shape fluctuation following on the heels of down-up changes in the aluminum price, in spite of the robust demand for alumina.
For more information, visit www.researchandmarkets.com/research/a78f42/china_alumina_indu.