DJ China Spot Alumina Prices Fall Further; Chalco Prices Unch
SHANGHAI, Mar 03, 2008 (Dow Jones Commodities News via Comtex) --
Spot alumina prices in China quoted by alumina refineries other than Aluminum Corp. of China Ltd. (ACH), or Chalco, have slipped around 10% from last week on high inventories and shrinking demand, industry participants said Tuesday.
If non-Chalco refineries don't cut their alumina production to control the overall supply, and spot prices continue to decline, Chalco may have to respond to the widening price gap, analysts said.
"Quotes by major non-Chalco refineries in Shanxi and Shandong provinces fell to CNY3,600 a (metric) ton yesterday, and prices also fell slightly from last week in other places," a sales executive at a refinery said.
Last week, spot alumina prices quoted by major non-Chalco refineries were around CNY3,800-CNY4,000/ton.
Meanwhile, alumina quotes by Chalco, China's biggest alumina and aluminum producer by output, remained unchanged at CNY4,200/ton.
"The main reason (for falling prices) is the inventories of both alumina and aluminum are quite high," said the sales executive, who declined to be named.
Unusually harsh winter weather in January led to shutdowns of aluminum smelters in China's southern and central provinces, which in turn curbed the demand for alumina, the key raw material used to produce aluminum.
Analysts estimate China's total aluminum production losses due to the heavy snowfall and freezing temperatures exceeds 300,000 tons.
However, traders said post-Chinese New Year holiday demand for aluminum is still not as strong as had been expected.
"If non-Chalco refineries don't cut (alumina) production, alumina prices will probably fall further," said Zhu Yan, an analyst at Beijing-based state-run metals research firm Antaike.
"Chalco's price changes usually lag behind the spot market, but if the downward price trend continues, it will have to respond to it sooner or later," Zhu said.
-Helen Sun contributed to this article; Dow Jones Newswires; (86-21) 6120-1200; helen.sun@dowjones.com
(END) Dow Jones Newswires
03-03-08 2334ET
Copyright (c) 2008 Dow Jones & Company, Inc.
