Alumina spot prices up on good demand

Spot prices of alumina, a key input for making aluminium, have continued their uptrend, given strong demand conditions from key user industry.

Analysts point out that recent deals have been struck at $400-410 a tonne as against $380-390 a tonne in the middle of February.

The spot prices had dipped to $230-240 a tonne at the end of January, due to rising supplies. National Aluminium Company (Nalco), one of the country's largest exporters of alumina on a spot basis, is expected to get better realisation following a recovery in global prices.

Analysts at foreign brokerage houses, however, point out that alumina prices can once again weaken over the next few months, as the Chinese production is forecast to reach 20 million tonne in calendar year 2007 as compared with 13.7 million tonne in CY06.

As a result, analysts highlight that the raw material could again come back to $300 a tonne over the next few months.

Meanwhile, the current uptrend in the spot prices is due to global aluminium production amounting to 2,057,000 tonne in January as compared with 2,013, 000 tonne a year earlier. Alumina typically accounts for 22 to 23 per cent of the cost of aluminium production.

In early February, Aluminium Corporation of China (Chalco), the leading player in that country, raised the prices by approximately 50 per cent to $462 a tonne, which also helped push global alumina prices up.

Earlier, the weakening trend in the spot prices had led to the company cutting its production by 6.3 per cent y-o-y to 3.82 million tonne in the December 2006 quarter.