China's alumina production will increase to 74.35 million mt by 2020 as new operations come online, leaving a supply surplus of 730,000 mt that could weigh on prices, according to a presentation from Huo Yunbo, senior analyst with Chinese consultancy Antaike, at last week's Aluminum Week in Qingdao.
About 1.8 million mt/year of delayed new capacity will come on stream by 2020, taking the total to 4.7 million mt/year for the year.
Huo said there was room for growth of alumina demand as substantial primary aluminum capacity will come on stream before primary aluminum capacity breaches the ceiling of 45 million mt/year. She said domestic alumina prices may hover around Yuan 2,400-2,900/mt ($342-$413/mt) in 2020.
China's alumina supply and demand have been largely in balance this year but a surplus is seen in 2020 as new facilities come online. Output this year has been curtailed by production cuts and delayed commissioning of new projects, while demand has been impacted by declining primary aluminum output, Huo said.
China's alumina output in 2019 will reach 71.59 million mt, down 0.3% year on year, and leaving a surplus of around 400,000 mt.
China's alumina production capacity will hit 87.15 million mt/year in 2019, up by 3.8 million mt/year compared to the end of 2018.
In the longer term, China's alumina output will move to a surplus from a shortage, as capacities are relocated to Southwest regions, closer to bauxite resources, she forecast. The expansion in domestic capacity and the inflow of low-cost seaborne alumina may add more pressure to domestic supply.
However, China's alumina capacity will increase slowly given primary aluminum capacity is unable to breach 45 million mt/year.
Alumina production costs are also expected to decrease. A large number of new bauxite projects in Guinea will be put into operation, which might weigh on bauxite import prices and partly relieve supply tensions in the domestic market.
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