Aluminum Corp of China (Chalco), the country's largest producer of the metal, raised its spot alumina price by 8.5 per cent yesterday to reflect tightening supply.
The Beijing-based company boosted the price to 3,800 yuan a tonne, effective yesterday, from 3,500 yuan earlier. Chalco turns alumina into aluminium at its smelters before selling the metal to manufacturers.
The import price for alumina, including cost, insurance and freight, was about US$430 per tonne and supply was tight, Chalco said. The increase was a quick turnaround as the company had earlier cut the spot alumina price 10 per cent to 3,500 yuan a tonne on September 13.
The price rise, the first by the company since March, reflected increasing demand, said Zhang Xi, analyst at UOB Kay Hian Investment.
'The discount between aluminium trading in Shanghai to that on the London Metal Exchange is narrowing; stockpiles at London Metal Exchange are falling; all these signal that aluminium price will rebound in the near term,' he said.
He added the price rise would not have much impact on Chalco's profit as less than one-third of alumina it produced was for external sale.
However, tightening supply and price rises would help to push up aluminium price and boost Chalco's margin.