A higher alumina price index brings in good news for Alcoa, Hydro, and Nalco
Aluminium price index has been trending higher. The prices of the key aluminium raw material were stable in June and July 2017 around the US$300 per tonne level, but they started gaining momentum up the track last month. Since LME and SHFE aluminium have been strong, alumina too seems to have joined the uptrend.
Source: Market Realist
Alumina price index was not as volatile in the past. It was primarily decided between the buyers and the sellers. The index shows the dynamics of the physical market unlike aluminium, where sentimental factors can be short-term price drivers, Market Realist analyst Mark O'Hara explains.
According to Platts, the alumina price index hit multiyear highs in early September. The rising alumina price index is good news for companies like Alcoa, Norsk Hydro, Nalco since they produce alumina for their internal requirements and export to outside parties as well.
In Q2 2017, the higher alumina price index and an increase in other raw material costs made a deep dent into Century Aluminum’s profitability. If the alumina price index continues to trend higher, it could have a negative impact on the company's earnings in the coming quarters.
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