Alumina prices up 20% in 6 months

Export demand pushes up prices to Rs 23,000/ tonne

Spot prices of alumina "" the major raw material for the production of aluminium "" have surged 20 per cent in the domestic market in the last six months to Rs 23,000 a tonne, from Rs 19,000 a tonne in July 2005, on the back of rising exports demand and higher aluminium prices.

Internationally, alumina prices jumped to an all-time high at $600 a tonne, and National Aluminium Company (Nalco) reaped benefits from this by signing a few contracts at as high as $580 a tonne, much higher than the January 2003 price of $220 a tonne.

Aluminium prices in India shot up about 40 per cent in the same period to approximately Rs 1,25,000 a tonne now.

Nalco currently exports about one million tonne of alumina to the world markets, largely to China. Nalco produced about 1.5 million tonne of alumina in 2004-05, of which it sold 22,000 tonne in the domestic market.

Many companies use bauxite to be first converted into alumina and then into aluminium. Generally, four tonne of bauxite is required for manufacturing two tonne of alumina, which can then be converted into one tonne of primary aluminium.

"Alumina prices are peaking day by day owing to rising prices of bauxite "" the raw material for alumina "" and aluminium. Nalco has recently signed a few contracts at varied prices, the highest being $580 a tonne," a Nalco official said.

Nalco has been making rapid progress in alumina and metal exports, which grew considerably since the first phase of its capacity expansion was completed.

Already a global player in alumina with a share of about 8 per cent, the company's second phase expansion would raise the overall alumina capacity to 21 lakh tonne and metal capacity to 4,60,000 tonne. And this will eventually boost its exports in the coming years.

The current upturn in alumina began in early 2003. The prices steadily climbed up to $500 a tonne in March 2004, but increased output and, hence, falling demand from aluminium producers knocked the prices down to below $270 in July 2004.

In fact, traders expected the prices to dip even further as major producers went on ramping up their aluminium production capacity. But the reverse happened when the Chinese aluminium producers decided to shut down a lot of smelters on the back of energy supply constraint, which pushed up alumina prices. Except for a few occasions, alumina prices have not looked back since then.