The Platts ex-works Henan alumina spot price was Yuan 2,680/mt ($437/mt) for 70:30 cash and credit payment Tuesday, down Yuan 10/mt from Monday and down Yuan 40/mt on the week.

The current price also reflected a decline of Yuan 110/mt from a month ago.

Henan spot offers Tuesday were heard at Yuan 2,680-2,700/mt cash to 50% credit payment terms, down from mostly Yuan 2,680-2,700/mt full cash basis previously.

Acceptable trade levels were pegged around Yuan 2,650/mt cash and Yuan 2,680/mt for up to 30% credit, several refiners, traders and smelter sources agreed.

Despite a slight rebound in domestic aluminum prices Tuesday, market sentiment stayed weak ahead of the Lunar New Year holidays as the aluminum outlook remained dim in the face of continued excess supply and growing capacity, sources added.

China will be closed for New Year celebrations from February 18-24.

Spot buying was also limited as smelters continued to anticipate lower alumina levels in the near term, and cash flow concerns prevailed ahead of the holidays as financing from banks remained tight.

Lower prices for imported alumina at the ports were also adding pressure, sources said.

Prices for imported alumina ex-Lianyungang were pegged at mostly Yuan 2,670-2,680/mt on Tuesday, down from Yuan 2,670-2,700/mt on Monday.

On Tuesday, the front month February aluminum contract on the Shanghai Futures Exchange closed at Yuan 13,080/mt, up from Yuan 12,700/mt last week and from Yuan 12,820/mt a month ago.

In the near term, the Chinese spot alumina price is still expected to test lower but downward movement will be limited, sources said.

"SHFE metal prices went up today, so that should support alumina slightly," a Henan refiner said.

"Major refiners like Xinfa and Jinjiang are also expected to reduce their spot supply in the open market as they will need to reserve more for their new smelter capacities, so that will mean less spot in the market," a Shanxi refiner added.

Shandong Chiping Xinfa aims to raise production capacity at its aluminum smelter in Xinjiang by about 27% this year to 1.9 million mt/year from the current 1.5 million mt/year, Platts reported last week.

Henan's East Hope Group also plans to increase capacity at its Xinjiang smelter to 1.2 million mt/year by June, up 50% from the current run rate of 800,000 mt/year, Platts also reported.

This week, Jinjiang Group's Jinlian Aluminium in Inner Mongolia told Platts it plans to raise primary metal capacity by 150% to 1 million mt/year by end-2015, from the current run rate of 400,000 mt/year.�