Smaller alumina producers have raised prices by 7 percent,
triggered by an inventory shortfall in the global market and rising
demand in the lead-up to Spring Festival.
Analysts said the rise is in line with the 19.7 percent price
increase for imported alumina to 4,550 yuan per ton over two
months. Alumina is the raw material used for electrolytic aluminum,
the basic material in aluminum-based products for construction and
auto industries.
Aluminum Corp of China Ltd, or Chalco, the nation's largest
producer of the metal, is expected to increase its alumina price
soon.
"We expect Chalco to raise the alumina price in the next one or
two weeks, following the price hike by smaller producers," said Li
Jingyuan, a non-ferrous metals analyst at Haitong Futures Co in
Shanghai.
Chalco raised the alumina price in November to 3,800 yuan per
ton from 3,500 yuan, and again in December to 4,200 yuan.
"Small producers with limited production capacity are more
sensitive to price fluctuations than large producers like Chalco,"
said Li Jingyuan at Haitong Futures.
"They (small producers) are always the quickest to respond to
changes in market supply and demand," Li said.
Industry experts said the price increase would put pressure on
many aluminum processors because much of their profit would be
wiped out by rising material costs in a relatively weak market for
finished products, as reflected in declining Shanghai aluminum
futures prices.
The most actively traded aluminum futures on the Shanghai
Futures Exchange closed at 18,200 yuan per ton yesterday, down 0.33
percent from the day before. Shanghai aluminum has dropped a total
2.3 percent over the past two months.
Industry analysts said strikes in Guinea and declining alumina
production in Australia and the US also helped push up domestic
prices, because a production drop and increased domestic demand is
expected to widen the supply gap.
"Domestic demand is rising because aluminum producers are
increasing their stockpiles for the coming Spring Festival," said
Liu Minda, a non-ferrous metals analyst at Huatai Securities in
Nanjing.
(China Daily January 16, 2008)
