Chalco cuts spot alumina price after closing capacity

HONG KONG, Nov 11 (Reuters) - Aluminum Corp of China Ltd, the world's third-largest producer of alumina, has reduced its spot alumina prices by 10.3 percent, the fourth reduction since June. The firm, also known as Chalco, is offering spot alumina at 2,600 yuan per tonne, from 2,900 yuan last Friday, according to its website (www.chalco.com.cn). A sales manager at one of the firm's alumina plants said its spot prices had fallen since early June due to reduced domestic demand. Alumina is the main material for primary aluminium production. But Chalco's current spot price, down 26 percent from June, is still nearly a quarter higher than prices offered by other Chinese alumina refineries, smelter officials said. They said non-Chalco alumina suppliers were selling spot materials at about 2,100 yuan a tonne, which could force Chalco to reduce its price further in the coming weeks. The Chalco sales manager said the the Beijing-headquartered firm did not have much spot alumina to sell after it shut some alumina capacity. "We don't have much spot material. We are supplying to term contracts," the sales manager told Reuters on Tuesday. The term contracts were priced on aluminium prices on the Shanghai Futures Exchange. Chalco had temporary shut a total of 4.11 million tonnes of alumina capacity at 4 refineries in Henan, Shanxi and Shandong provinces as of Nov 5, it said in a statement last week. The shut capacity could cost Chalco about 685,000 tonnes of alumina production in November-December this year. The shutdown comes after Chalco temporarily closed 720,000 tonnes of aluminium smelting capacity in China from October because of low prices and weak demand. That closed aluminium capacity could consume 1.44 million tonnes of alumina annually. Other Chinese alumina and aluminium producers have also slowed production, in the light of recession fears triggered by the global financial crisis. Including Chalco's shut capacity, more than 1 million tonnes of aluminium smelting capacity, about 6 percent of China's total, has shut temporarily, according to smelter officials. About 7.7 million tonnes of alumina capacity, about a fifth of China's total which is expected to reach as much 36 million tonnes by the end of this year, has also shut.