DJ China Spot Alumina Prices Up 9.5%; Chalco May Increase Prices

SHANGHAI (Dow Jones)-Spot alumina prices in China have increased by 9.5% in less than three weeks to CNY4,200 a metric ton, and will probably rise further on strong demand, traders said Thursday.

China’s biggest alumina and aluminum producer by output Aluminum Corp. of China Ltd. (ACH), better known as Chalco, increased its alumina prices to CNY3,800/ton from CNY3,500/ton Nov. 27 after non-Chalco refineries increased their prices.

Chalco’s alumina output accounts for about half of the country’s total production.

Spot alumina by non-Chalco refineries is quoted at CNY4,200/ton, from CNY3,800/ton in late November, said an executive at a refinery in central China.

"The overall inventory level (of alumina) is quite low," the executive said.

Traders said the Chalco price hike followed an increase by non-Chalco refineries late last month.

"It’s possible that Chalco might follow again this time, and if it follows, we might see a further (price) upside," said Zhu Yan, an alumina analyst at metals research firm Antaike Information Development Co.

Alumina, made from the bauxite, is used to produce aluminum.

Analysts said despite a jump in domestic output, rising production costs — including higher bauxite and electricity prices — are likely to underpin alumina prices at least before Chinese New Year in early February amid strong domestic demand.

China’s aluminum production rose 50% on year in January to October to 16.12 million tons, the National Bureau of Statistics said.