Acording to a report from Platts, China's Shandong Chiping Xinfa Group has cut operating capacity at its Shanxi Jiaokou alumina refinery in northern China to 50% due to limited bauxite supply and power plant issues. This was confirmed by a company source on Thursday.
The source also added that refinery is now running at 1.4 million tonne per year capacity, down from 2.8 million tonne per year, the source added.
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The sources however has not mentioned how long the cut will last and when the plant will resume normal output.
The problems have not affected operations in Xinfa's other alumina refinery in Shanxi. Shanxi Xinfa Chemical refinery is currently operating at 1.8 million tonne per year operating rate. The company’s alumina refinery in Shandong province in eastern China that has an annual capacity of about 6 million tonnes, but it has been operating at around 3 million tonnes per year since 2016.
It also operates Guangxi Xinfa alumina refinery in Guangxi province, south-central China with a capacity of 2.4 million tonnes per year.
Market participants are of the view that the development may raise Chinese domestic spot alumina prices in the near term. Alumina prices are expected to remain above RMB 3,000 per tonne and some refiners and traders expect the prices to go even higher. However, lower aluminium ingot prices in the domestic market may negatively affect alumina prices.
Xinfa source suggests a wait and watch stance on alumina price movements. The recent news on addition of 5 million-6 million tonnes of new alumina capacity in Q4 2018 through early 2019 has also put pressure on alumina price.
On Friday, Shanghai Metals Market domestic spot average alumina price stands at RMB 3,040 per tonne (US$438.50 per tonne).
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