Nalco closes latest spot alumina tender at $393/mt FOB

India's second-largest aluminium major, state-run National Aluminium Co., has concluded its latest spot alumina tender at $393/mt FOB Visakhapatnam for 30,000 mt (plus or minus 2% shipping tolerance) March shipment, a senior company official told Platts Friday.

The tender closed late February 8 and the price received was higher than an expectation of around $380/mt FOB forecast by company chairman C R Pradhan in an earlier Platts report. Nalco's previous spot tender was completed at $352.70/mt FOB Visakhapatnam for February shipment, which was a sharp increase from a low of $280/mt FOB done late last year.

"The price is totally dependent on Chinese demand, which has been very strong recently. The earlier Guinea bauxite mine issues also supported prices," the senior official said. "But now we cannot say where prices will move next, as we will have to see how Chinese demand is after the Chinese New Year," he added.

Chinese demand jumped in recent weeks as smelters stocked up ahead of the Chinese New Year holidays. As the holidays draw near (February 18-25), most stocking up activity has been completed and some Chinese sources expect demand to slow down and prices to soften again after the break. But recent announcements by seven non-Chalco alumina producers in China of output cuts in a bid to support domestic alumina prices in China may help to support overall price levels, Chinese sources said.

Most sources, however, expect alumina prices to hold between $300 and $400/mt CIF China in the short to medium term. A China Minmetals official said a higher Nalco tender price would likely drive import prices to China above $400/mt CIF in the short term, "but it will not last and the long term view is that prices will soften," he said.

The Nalco official said the company was currently "calculating our total position now as our financial year is coming to a close at the end of March...so we have not decided on when the next tender will be." As for Chinese demand expectations, "let's see after the Chinese New Year," he added.

Nalco, which has a design capacity of 1.575 million mt/year of alumina, expects to reach around 1.53 million to 1.54 million mt for the year ending March 2007. It exceeded capacity to produce 1.59 million mt in the previous fiscal year ended March 2006 on the back of very strong prices at the time.