We received reports in our WeChat group that alumina prices jumped. Guizhou prices were at RMB2900/t and we saw one report of RMB3000/t being achieved. As AZ China’s Monte Zhang put it, this is “crazy.” Our monthly aluminum report went out that morning. If you are a subscriber but didn’t receive it, please let me know as soon as possible.
This month’s report is especially important, as it gives subscribers a complete analysis of the Replacement Permit situation, including who has bought them, which ones are still for sale, and the origins and ultimate purpose of the program.
Following our news that Shandong government has called for a more relaxed attitude on shutting down factories, some downstream factories are now re-opening. That should stimulate demand in that area. As well, there’s still plenty of fund money still looking for a position.
We heard that Hongqiao has been offering small discounts (less than 50RMB per ton), on metal and alumina. We understand it’s all to do with generating some cash quickly. Given Hongqiao’s cash cost of producing alumina sits at about RMB2400/t, they are still making money on their alumina trading, and given they have lost or are losing over 2 million tons per year of primary metal, that’s 350,000t per month of alumina that they don’t need.
We also played guess the number! Hydro Norway have been pretty pleased about their new instillation in Karmoy, and the numbers they gave in the press release show it is with good reason.
According to a story I read, they have 60 pots producing 75,000t per year, and are achieving a 15% reduction in electricity consumption. I am no technologist, but I ran those numbers through a calculator. It means that they are producing 3.4 tons of metal per pot per day. That puts their pots at the upper end of the amperage scale. I am guessing somewhere near 500KA. That sort of amperage traditionally comes with a high electricity specific consumption, though in the last 10 years most R&D has gone in the low-consumption direction.
Let’s assume they are are using 13,500KwH/t as their baseline. Taking 15% off that puts them at around 11,500 KwH/t, which is truly remarkable. Being Norway, they are running at a low electricity cost to begin with, but even if you assume US$10/MwH the numbers add up to a pretty big reduction on electricity costs.
There’s lots of assumptions and guesses in our numbers, so if you have a more accurate calculation, we would love to hear from you…
That brings us to Wednesday,
Stocks of 6063 alloy in the south of China now exceed 150,000t, and with producer and other inventory on top of the market stocks, we think the total inventory is somewhere north of 200,000t.
Paul received an email this morning from Petrocoque, announcing that their CEO Augusto de Carvalho has quit. He finishes at the end of the week. I have reached out to Petrocoque for more information.
We heard a story this morning that Zhongwang has purchased a German extrusion company. No word as to whether this story is true, nor which extrusion company.
When the Panama Papers story broke a while back, we did a corporate search of all China’s aluminium companies, and found that all but two of them were registered in China. The only exceptions were Zhongwang and Weiqiao, who were registered in BVI.
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