The Effect on Electrolytic Aluminum Stock is Limited

 Recently, China Aluminum has rise alumina spot price again from 3,900 to 3900 Yuan/ton, which will be implemented since 21, March. Yesterday aluminum plate performed generally, the major stocks have not been significantly affected. Experts predicted that price rise of alumina in a short period would have some impact on some aluminum companies, but price increases can¡¯t keep long, therefore the impact on aluminum plate is limited.

¡¡Analysts said that the recent aluminum price (19560,10. 0.05%) has raised continuously major consisting in recovery of electrolytic aluminum production capacity. A large number of electrolytic aluminum enterprises started producing and increased demand for raw materials. It is expected to start rate of 2007 domestic electrolytic aluminum production capacity is about to increase by 5% over 2006. Downstream industries strong enhance the desire to expand alumina production capacity, promote aluminum prices up again.

¡¡However, from long-term point, the sustainability of this round of alumina price rises worth doubting. SDRC data showing alumina projects that are under construction are 11, with planed capacity of 12.15 million tons. Building capacity is 6.1 million tons. Rebound of Alumina prices will lead to the release of idle production capacity, and suppress prices in the future. GuoTai Jun An considered that alumina prices may fall in the second quarter.

Overall, the effect of alumina prices rise on the electrolytic aluminum industry is limited. Major electrolytic aluminum companies and alumina suppliers sign long-term contracts. The affected businesses is mainly that purchase by cash. But people in the industry pointed out that electrolytic aluminum output expansion trend can be more obvious. There should be concern about the structural adjustment and investment products processing enterprises engaged in aluminum.

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