Home / News & Blog / High Raw Material Costs Drive Up Aluminum Oxide Abrasive Prices
Prices for aluminum oxide abrasives have surged to all-time highs due to a combination of rising raw material costs and market dynamics. Since October 1, increasing prices for industrial aluminum oxide, driven by supply and demand forces and rising aluminum oxide futures, have put immense pressure on the market.
Reflecting market trends, white fused alumina and sintered alumina prices surged by nearly RMB 500 per ton, pushing the cost of white fused alumina over RMB 6,000 per ton. Industrial aluminum oxide is sourced from electrolytic aluminum, which is subject to supply constraints in refractories. Consequently, the operating rates of white fused alumina and sintered alumina remain low, and some companies have suspended production.
The situation is similar for brown fused alumina, which is also affected by a shortage of bauxite. Operating rates are low, and prices are holding at high levels. In October, the bauxite market displayed a steady upward trend, with some suppliers hiking bauxite prices by RMB 50-100 per ton. Although some refractory manufacturers kept their prices unchanged to keep regular customers, the severe shortage of raw materials has disrupted calcined bauxite production, causing many operations to shut down. Some started to test imported raw material to make calcined bauxite, while others switched to make sintered mullite, kaolin, and other products.
The domestic market is currently in a state of relative balance, similar to September and October. In November, an aluminum oxide production facility with an annual capacity of 1.2 million tons in northern China will likely release 50,000-60,000 tons of capacity onto the market. This additional supply is expected to bring down demand for white fused alumina by about 20,000 tons, while exports of white fused alumina are expected to increase by 40,000 tons. The demand for new electrolytic aluminum capacity will pick up slightly, but November is anticipated to see a slight oversupply.
Starting in November, China’s aluminum oxide exports are expected to rise, and this could dampen rising international aluminum oxide prices. Yet, it might not be enough to fully compensate for any gaps in international supply. Further, by year-end, Australia’s idle aluminum oxide capacity of 1.2 million tons is anticipated to come back online, and Indonesia’s Mampawe plant is expected to produce 1 million tons of aluminum oxide capacity starting around January. As a result, the supply-and-demand situation for aluminum oxide globally should improve significantly during the first quarter of next year.
The supply-and-demand balance in both domestic and international markets for aluminum oxide is moving toward a more relaxed state, and we expect this trend to hold at least until December 2024. The price volatility of aluminum oxide abrasives is tied directly to raw material costs and supply-chain dynamics. Players in the abrasives industry should remain aware of and adapt to these market changes to optimize operations and maintain competitiveness.
