UPDATE 1-RUSAL signs MOU with Chinese firm on aluminium

To set up JV to produce aluminium, products in Guangxi

To mine bauxite, build alumina complex in the Asia Pacific region

HONG KONG, March 28 (Reuters) - United Co RUSAL Plc, the world's top aluminium producer said on Monday that it had signed a memorandum of understanding (MOU) with Xinshan Aluminum Industry Demonstration Park to develop bauxite mining and alumina and aluminium production projects.

Within two months, a working group would be set up to analyse details of the joint projects under the MOU, Rusal said in a statement.

Rusal may export technologies for production of aluminium and aluminium products and help build an aluminium production plant in the territory of Xinshan Aluminum Industry Demonstration Park in China's southwestern region of Guangxi, which may demand 2 million tonnes of bauxite a year.

Bauxite is the ore for alumina production, which is used for primary aluminium production.

The two parties also could set up joint ventures to mine bauxite and build alumina complex in countries in the Asia-Pacific region, Rusal said.

Reuters reported that rising LME linked alumina prices are prompting Chinese smelters to accelerate a shift to cheaper domestic supplies and delay, divert or resell term arrivals which are expected to decline further after hitting 8 month low in February.

Traders said that LME aluminium prices rose 11% last year and touched their highest level since September 2008 at USD 2,651 supported by brisk demand growth and soaring energy costs. The price stayed at USD 2,625 per tonne at 0607 GMT.

Smelter officials said that many Chinese smelters have paid 15% to 15.5% of LME aluminium prices for the 2011 imports. At those rates the prices of term imports were around USD 394 per tonne to USD 407 per tonne FOB or the costs of import were around CNY 3,300 per tonne to Chinese ports. By contrast, locally produced alumina prices in China have stayed around CNY 2,800 per tonne for much of this year.

Top alumina refinery Aluminum Corporation of China Limited which supplies the bulk of alumina production to its own and other Chinese smelters under term contracts has offered spot alumina at CNY 3,000 since the beginning of March from the previous CNY 2,900 mark. The price gap has prompted state backed research firm Antaike to predict China would produce 95% of the alumina needed domestically this year due to expanded capacity from 88% last year.

A trading manager at a smelter in China's top aluminum producing province of Henan said that we have not taken any of our term alumina so far this year. The smelter had resold the term deliveries. But some Chinese smelters had needs to import alumina linked to metal supplying contracts signed for good quality Australian alumina which could keep China's monthly imports at 200,000 tonnes to 300,000 tonnes this year.

Smelter and trading sources said that imports will also arrive because some overseas suppliers were unwilling to change destination ports for Chinese smelters

Related Tags:aluminum pipe, 3003 aluminum pipe, 2024 aluminum pipe

Detect-Metals is a company that has proven experience, certified quality and dependable service providing specialty metals leadership and supply chain innovation. It is through those strengths that we have expanded our abilities