Chinalco Reduces Alumina Price      

Aluminum Corporation of China (Chinalco, SH: 601600), one of the top three alumina producers in the world, announced on June 2nd that it reduced the price of alumina from RMB4 200 per ton to RMB3 500 per ton, effective June 2nd, 2008. It is the company's first reduction of selling price of alumina after the two consecutive price rises in 2007.
   Chinalco supplies less than 100 000 tons of alumina spot goods to the domestic market a month," said an executive from China Nonferrous Metal Industry Association. "With the price reduction of RMB700 per ton this time, the price of alumina has already gone back to the price November 27th, 2007, afterward raising alumina price two times. As alumina produced in the company is mostly to meet the demand of its own electrolytic aluminum subsidiaries and long-term sales confirmations, the price change this time will not affect the alumina spot goods market in China."
   "Alumina enterprises with no bauxite resources are faced with more great pressure than Chinalco," said market analysts. The price of alumina spot goods in China is approaching the cost of RMB3 000-3 200 per ton in alumina enterprises that need to purchase bauxite from Indonesia.
   Due to the high import price of bauxite, the price of alumina in the domestic market will have no space for further reduction. With startup of new alumina projects, however, there is no possibility for a price rise either in China.
   The price reduction of alumina as a main raw material for electrolytic aluminum will not likely drive a price drop of aluminum because the production cost of aluminum will not be much down.
   "The summer is the period with the serious shortage of power," said the executive from China Nonferrous Metal Industry Association. "The government will limit possibly production of electrolytic aluminum that would have a negative impact on the domestic aluminum market."