Aluminum Hope Flickers in China

The Aluminum Corp of China Ltd. (Chalco) has raised its alumina prices this week and spot prices have risen 15 percent during the past week in China, according to a report on the China Daily Web site.

A rise in demand and prices in China, the world’s top user of alumina and producer of aluminum, could be followed by an increase in China's imports of alumina and aluminum scrap and may also help to push up international prices.

Chalco, one of the world’s largest alumina producers, has increased the price it charges for its alumina by 10 percent since that price hit a mid-January low.

A smelter executive quoted by China Daily says alumina prices are rising because some smelters are re-starting idled capacity.

After lackluster demand through most of the first quarter of 2009, the recent uptick is reportedly tied to purchases by China’s State Reserves Bureau as well as by purchasers responsible for power grid projects that may require nearly 1 million tons of aluminum.

Stronger aluminum pricing and demand are causing some smelter operators to restart idle capacity and bring new capacity online, according to the press report.

More than 700,000 tons worth, or 10 percent, of China’s idled aluminum capacity is in the process of re-starting, according to smelter officials contacted by China Daily.