The energy crisis in Europe and energy rationing policies in China are worrying the aluminium smelter owners as well as the alumina market. As per the latest data, the largest alumina market lies in Asia-Pacific. However, China, a major player in the aluminium market, is imposing hefty regulations due to environmental audits and scrutiny.
Before we focus on the alumina market condition in various geographies, let us take a look at its major end-user areas:
Alumina types (commercial grade) and their major end-user markets
| Commercial Grades | Uses |
| Smelter grade | Primary aluminium metal production |
| Calcined | Refractories Engineered ceramic |
| Low soda | Electricals Electronic applications |
| Reactive alumina | For calcination |
| Tabular or sintered α-alumina | Refractory applications |
| Fused | Manufacture of abrasives Refractories |
| High purity | Manufacture of synthetic gemstones |
The suffering alumina market in China and Australia:
In Q2 FY 2021-22, alumina prices peaked in China. As per the report of a global credit rating organization, before smelter curtailments, the country’s primary aluminium output reached 3.51 million metric tonnes in August 2022, rising 9.6 per cent in the year and 2.3 per cent from July.
However, Q3 FY 2021-22 was not exciting as the prices plummeted owing to the ceased operations in numerous smelters, including those in Yunnan and Sichuan.
Another thing that is worrying industry experts is the approaching winter season. In fact, it is already here. Last winter, several reports of power cuts and outages were reported globally. With the ongoing stringent hydropower supply and soaring coal prices, it is estimated that the electricity costs will also reach a new high as the air gets nippy.
A quick look at the current coal market scenario:
As of December 16, 2022, coal prices hover at US$ 259 per tonne. Global coal consumption is slated to rise to a record high in 2022 and hold at similar levels for the next few years, a report by the International Energy Agency (IEA) said.
The report forecasts global coal use to rise by 1.2% this year. The figure exceeds 8 billion tonnes in 12 months for the first time, breaking the previous record set in 2013.
India, at 7 per cent, will lead the countries witnessing a surge in coal demand, followed by the EU at 6 per cent and China at 0.4 per cent.
Alumina in Oceania
Moving away from Asia, the future of the alumina market looks grim in Australia too. Many refineries have not returned to their previous operation after the Covid-19 pandemic. Additionally, alumina prices in Australia were volatile in September as there was a delay in shipment in Western Australia due to rain. However, some reports said that Indonesia’s Bintan Alumina refinery commissioned its second production phase in September 2022. It may be good news as it will increase the market supply.
The European alumina market and its crisis:
Despite this news, the alumina market is still in hot waters due to Europe’s energy crisis and geopolitical conflict. Rusal, the largest aluminium producer in Russia, owns the Aughinish Alumina refinery in Ireland. It reduced its production by 10 per cent after the tension ensued.
Other notable refineries, such as the San Ciprian refinery, have reduced output by 50 per cent as of October 1, 2022, and Norsk Hydro in Norway is planning to trim almost 130000 metric tonnes of primary aluminium production annually.
In the end
It will be interesting to see how things unfold for the alumina and primary aluminium market in Q4. Additionally, the impact of global events in Europe and Asia-Pacific can cause massive disruptions in the alumina supply chain. The demand for aluminium products, including beverage cans, will likely suffer in Q4 due to global inflation and high-interest rates at the Central Bank in the USA, Europe and Australia. In 2021, a report stated that the alumina market will grow from USD 45.53 billion in 2022 to USD 72 billion in 2030. Amidst the crisis, will alumina reach its estimated numbers in FY 2022?