China Aluminum Raise Price Again Other Enterprises Claimed to Follow

Less than three months, China Aluminum Ltd. ("China Aluminum") has raised alumina price again. Yesterday, the Chinese aluminum industry announced that it raised the prices of spot alumina by 8.3% to 3,900 Yuan/ton. The "First Financial Daily" also attained yesterday that several aluminum enterprises are negotiating to follow and raise price after the Chinese aluminum increases price.
¡¡Some analysts pointed out that from the second half of 2006 many manufacturers have already started electrolytic aluminum projects. The cycle of electrolytic aluminum new projects is usually 11 months or so, which means a large number of electrolytic aluminum production capacity will release in the second half of this year.

China Aluminum Industry Sales Dep. yesterday confirmed that this was the second time the company raised the price this year. In February, China Aluminum once raised alumina spot prices from 2400 Yuan/ton to 3,600 Yuan/ton, an increase of 50%. However, in half of last year, China Aluminum Company had decreased aluminum prices down for four times, with a total reduction of 58%.

However, sales staff of other enterprises pointed out that because the alumina import prices to China's ports are beyond 4,200 Yuan/ton, which explained the international spot alumina market supply-demand relationship was very tense. "If we fail to import four million ¡« 500 million tons alumina, the domestic alumina materials may not be sufficient for electrolytic aluminum production. Last year, China imported 6.9 million tons of alumina.

Industry experts believe that whether the alumina prices continued to drop like 2006 or not depend on alumina enterprises production capacity control and electrolytic aluminum production output release conditions.

In 2006, China produced 13.24 million tons of alumina, rising 54% over the previous year, among of which China Aluminum Company produced 9.2 million tons of aluminum, and the "non-Al" enterprises produced more than 400 million tons. Several new smelting factories improve domestic alumina production capacity. And in the first two months of this year, the total output of alumina reached 2.83 million tons, and electrolytic aluminum production capacity released 1.89 million tons. Producing 1 ton electrolytic aluminum requires two tons of alumina.

It is worth noting that electrolytic aluminum price is dropping in contrary with alumina. Currently, the profits of electrolytic aluminum manufactures are on average 1000 Yuan--2000 Yuan/ton.

From the international market forecasts indicate that in 2007 aluminum market surplus remains. Shanghai Futures Exchange yesterday aluminum futures prices went down, but the trend is relatively stable.

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