Global alumina price surge supports Brazil’s alumina export to the US in H1 2018

After China and Australia, Brazil ranks as the third largest alumina producer in the world and plays a dominating role as alumina supplier. Hydro’s Alunorte that located at Para, Brazil, is known to be the world’s largest alumina refinery that exports almost 86 per cent of its total production to the world and the rest 14 per cent to Brazil’s domestic market.

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The United States is one of the major importers of alumina from Brazil and according to the international export-import data, it is found to import higher volume year-on-year. The below graph shows that in the first five months of the calendar year 2018, Brazil exported a total volume of 308,483 tonnes of alumina to the United States, up 40 per cent from 184,358 tonnes in 2017. The reason could be the rise in demand for alumina because of the revival of the country’s dormant aluminium production capacity. For instance, soon after the announcement of higher US tariffs on imported aluminium, Century Aluminium declared to restart its production by investing US$ 100 million. Even Magnitude 7 Metals announced plans to reopen its former Noranda aluminum smelter in Marston, MO, with the aim of bringing two of the three production lines back into service over two years, beginning in 2018.

Besides volume, Brazil’s export revenue from the United States in the first five months 2018 also increased. The below chart shows that in Jan-May 2018 Brazil earned US$ 133 million, in contrast to US$ 61 million in  the corresponding period of 2017, down 54 per cent. The reason for this sweeping growth in revenue could be the alumina price hike across the globe. In H1 2017, the global alumina price was approximately US$ 350 per tonne, while that in H1 2018 was around US$ 450 per tonne (approx).

However, the alumina export volume from Brazil may face a hit in the coming time until the situation at Hydro’s Alunorte Refinery comes under control. The country is even expected to slip from the top three positions as an alumina supplier. In February, Hydro was forced to cut output at one of its major alumina refineries, following allegations by prosecutors of a waste spill at one of Alunorte's bauxite refuse deposits. Later in May, even the Brazilian Federal Court upheld the state court decision.