China's alumina prices recover as refineries ask more

Spot alumina prices in China showed signs of recovery this week, with some refineries raising spot prices by 3 percent over last week, industry sources said on Wednesday. However, the price hikes did not include Aluminum Corp of China Ltd (Chalco), the world's third-biggest alumina producer. A source at the firm said it would keep its spot price at 3,900 yuan ($519) per tonne, ruling out market talk of a planned price cut in late September. Firm local prices could trigger Chinese aluminium smelters to import more alumina, which in turn could support world prices affecting major producers, including Alcoa Inc and Rio Tinto. Alumina is the main raw material used for aluminium production. "We want to raise prices a bit," said a manager at one of Chalco's rivals. In May, non-Chalco alumina refineries planned to cut output to support prices, while industry sources said expanded capacity had spurred the refineries to sell alumina at even lower prices, setting the course for the recent decline. But increased prices of imported bauxite, the ore refined into alumina, pressured non-Chalco refineries to raise prices. The latest move may help support Chinese prices, which fell to as low as 3,300 yuan per tonne last week versus about 3,600 yuan in mid-August. Weiqiao Aluminium, China's second-largest alumina producer after Chalco, was offering spot alumina at 3,500 yuan per tonne versus 3,400 yuan last week, a sales manager said. A refinery controlled by Lubei Chemical was offering spot alumina at 3,450 yuan, a company executive said. Non-Chalco refineries are offering higher prices even though world prices have remained soft this week, at around $375 per tonne for delivery to Chinese ports versus $380 last month and $390 in July. "There is not easy to sell at the price. But if prices keeps on falling, the market may collapse," the Chalco source said. Chalco, which produced 51 percent of the country's alumina in the first half, has not changed its spot price since March. Most of Chalco's alumina is sold to its wholly or partly owned aluminium smelters. China's alumina production surged 55 percent to 11.1 million tonnes in the first seven months of the year from the year-ago period. Much of the additional output was produced from bauxite imports, which rose 158 percent to 12.5 million tonnes in the first seven months. The country's higher inflows have helped boost world bauxite prices to about $70 to $75 per dry tonne for spot materials delivered from Indonesia and India to Chinese ports, compared with about $60 a month earlier, traders said. Higher freight charges were also pushing up prices.