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Chinese demand sees alumina spot sales rise

Metal Bulletin’s fob Australia alumina index settled at $320.92 per tonne on Friday October 25, from $321.22 previously, as spot activity ramped up with deals mainly into China.

The majority of volume went at $322 per tonne, with one producer selling two large shipments into China at that level.

“There has been a lot of demand from China, both for spot and 2014 business,” a producer said.

Some distressed cargoes were also sold in the Middle East, after the Ma’aden smelter in Saudi Arabia halted production on one of two potlines on October 16.

Material that had been earmarked for the Alcoa-Saudi joint venture has had to find a new buyer in the Middle East. Sale into another region was not feasible due to unbreakable freight contracts.

“The only other option would have been to declare force majeure on the freight contracts,” a source said.

The latest tender from Indian producer Nalco was also settled last week, with sources saying that 300,000 tonnes of alumina was sold for shipment in ten parts next year, at 17.91% of London Metal Exchange aluminium prices. At Friday’s official three-month aluminium price of $1,855 per tonne, that would be $332.23 per tonne.

“That’s a hefty number for next year,” a trader said.

There is also a tender from PT Indonesia Asahan Aluminium (Inalum) in the market, but for non-standard shipment tonnages of 22,000 tonnes.

“The Inalum tender is not standard, and is harder to organise,” the trader said.

Offers for the Inalum tender have been around $320-325 per tonne, the trader added.

An aluminium producer reported the purchase of a cargo in the Atlantic market at $315 per tonne. He said that fears over the impact of the LME’s new warehousing rules are encouraging sellers to shift material now.

“There are a few offers in the Atlantic and some people are quite desperate to sell,” the aluminium producer said. “If the LME’s rule changes really do change the delivery queues, then aluminium premiums will fall and alumina should fall as well because some smelters will be forced to shut down.”

Though spot activity increased over the past week, it is expected to remain quiet until the impact of the LME rule changes can be adequately assessed.

“There won’t be much in the short term,” a producer said. “People need to analyse what happens after the rule changes.”

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