Aluminum Corp of China has cut July alumina prices by 7 percent to counter sluggish demands amid the European debt crisis and the Chinese government's tightening measures.
The reduction see alumina price fall 200 yuan to 2,650 yuan per ton. It is the second consecutive cut by Chalco, the country's top aluminum producer and the world's third-largest alumina maker, following a 5 percent reduction in June.
"Lower alumina and aluminum prices combined with the scrapping of preferential power tariffs will further erode the profitability of the company, which may post quarterly losses in the second half," Essence Securities Co said.
Prices of alumina, a major ingredient in producing aluminum, have headed south since earlier this year due to concerns over global economic recovery and overcapacity. The spot alumina prices plunged 300 yuan per ton last month.
Meanwhile, the central government has canceled preferential power prices for energy-intensive industries, including aluminum and steel. Punitive power tariffs will be imposed on high-polluting industries as efforts to cut energy consumption speed ahead.
"Under current product prices, some aluminum producers have already gone into the red. If the power prices were to rise further, aluminum makers will suffer industry-wide losses," the brokerage said.
(Source:Shanghai Daily)
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