AME’s aluminium price forecast is US$1,590/t (US71.4¢/lb) for the December Quarter of 2016 and US$1,575/t (US71.0¢/lb) for the full year. In 2017, the average aluminium price is forecast to increase modestly to US$1,675/t (US76¢/lb). For alumina, AME forecast the price to average US$245/t in the December Quarter of 2016 (FOB Australia), which will contribute to an average 2016 forecast price of US$238/t.

The LME benchmark for aluminium ended in November where it started at US$1,731/t (US78.5¢/lb), which was close to the monthly average with a range of US$1,695/t to US$1,780/t. The US Midwest premium rose US$22/t (US1¢/lb) in November, continuing increases seen since a low in early September of US5.8¢/lb, to now stand at US8¢/lb. 

  • China’s SHFE spot price started the month at CNY14,880/t (US$2,156/t or US$1,843/t excluding VAT), reached a monthly high at CNY15,400/t (US$1,907/t excluding VAT) and closed on the monthly low at CNY14,050/t (US$1,740/t excluding VAT). Alumina prices have risen dramatically prior to the winter season with AME expects winter inventory building and new capacity planning to drive the price increase, with FOB Australia price at near US$320/t.
  • Total LME aluminium stocks have remained near static with a total of 2.15Mt, up 0.1Mt since end-October. Asian LME stocks are their highest level since the June Quarter of 2012 at 0.84Mt, approaching double the opening stock of 2016, while European stocks dropped to the lowest level since early 2009 at 1.03Mt, being nearly halved in 2016. Detroit warehouses maintain no delivery queue as at the end of October while queue length in Vlissingen, the Netherlands, was 294 days.

December will mark one year from the meeting of large Chinese producers and adoption of supply side discipline through 2016. There remains a chance that significant new capacity may reach production in the near term if supply discipline breaks down. AME recorded around 240ktpa of smelting capacity brought on line in November due to a high aluminium price—the majority coming from restart of idled capacity that had been offline for some time from minor smelting sites.

  • The 400ktpa Baihe (ex-Yellow River Hydro) Recycled aluminium smelter in Qinghai province, which halted in 2015, restarted its initial 60ktpa of refurbished 330kA capacity after Qinghai Investment Group acquired the smelter. The 60ktpa Qinghai Hualong Xianqi (ex-Jiayun) aluminium smelter restarted its initial 10ktpa of 200kA smelting capacity during November after curtailment in late 2014. The 100ktpa Jinneng Taiyuan smelter in Shanxi province also finished its 50ktpa 240kA restart project after full curtailment in the March Quarter of 2015. Further, AME also recorded the 180ktpa Xinjiang Joinworld smelter, beginning with a 90ktpa restart project to bring the smelter to full capacity, with 40ktpa of 400kA cells curtailed in the September Quarter of 2015 and reaching production in November.
  • New smelting capacity came from the Guizhou Xingren Denggao aluminium smelter, which brought 40ktpa production on line during the month as part of the aim to reach its 100ktpa capacity. The 200ktpa Jinghongyuan aluminium smelter in Chongqing was believed to have brought on line around 40ktpa by the end of November, although still operating at less than half of design capacity.

With a steadily rising amount of smelting capacity restarted in recent months, alumina availability fell into November with continued significant rises in benchmark prices. AME recorded 2.1Mtpa refining capacity restarts in China occurring as alumina price rose on the market tightness. 

  • Into November, the northwest China railway transport congestion continued with alternate truck transport only partially alleviating the issue of supply. AME suspects preparation of new smelting capacity and winter inventory build have placed stress upon the supply of alumina.
  • In November, Lubei Huagong alumina refinery in Shandong province restarted 400ktpa refining capacity after a short deferral; Hangzhou Jinjiang Group’s Sanmenxia Kaiman alumina refinery resumed 400ktpa refining capacity after complying with environment protection requirements; and Xiangjiang Wanji alumina refinery brought the remaining 600ktpa refining capacity on line after it was halted due the red mud failure in (month) temporarily curtailed its full production.
  • Globally, Vietnam’s 650ktpa Nhan Co alumina refinery started trial operation, with first calcined product to occur in December. In the US, the issues around Sherwin alumina refinery finally saw it shut down its final 500ktpa refining capacity.

In bauxite, Chinese imports from Guinea have increased as SMB-WAP exports from its second port in the Rio Nunez have ramped up. The Emirates Global Alumina Guinea bauxite project has also despatched a trial shipment to China in advance of 2018 production, with Guangxi Investment Group noted to have discussed potential cooperation. Within China, Chalco Henan Branch’s Dengfeng bauxite mine began mining of a new bauxite block with 600kt bauxite reserve.