CHINESE alumina prices are likely to clock up further falls in the coming quarter after shedding about 6 percent over the past three months, as growth in production outstrips demand, industry sources said.

    Alumina is the key ingredient in aluminum, which is used in everything from soda cans and cars to window frames and cooking utensils.

    Alumina typically accounts for around 40 percent of the cost of primary aluminum production and low prices could prompt aluminum smelters in China to ease proposed production cuts.

    These cuts had been expected at up to 5 million tons of annual capacity by year-end.

    Spot alumina traded at about 2,200-2,400 yuan (US$346-US$377) a ton in China last week, compared to around 2,350-2,550 yuan in June, sources at smelters said.

    The price may test 2,000 yuan in the coming quarter due to higher production, said China Merchants Futures’ analyst Xu Hongping and a trade manager at a large aluminum smelter.

    Xu said most alumina refineries in China were profitable, spurring new capacity to come onstream.

    Production costs at the bulk of refineries were estimated by industry officials to be below 2,000 yuan a ton currently.

    “Alumina prices should fall further because aluminum smelters have cut production, but alumina refineries have not reduced production,” the manager said.

    Alumina production hit a record 4.88 million tons in August. In contrast, production of primary aluminum has slowed over the past two months after smelters have closed about 2 million tons of high-cost capacity so far this year, as a cooling economy and oversupply in the industry pressures metal prices. (SD-Agencies)