Norsk Hydro's Alunorte production cut lifts aluminium shares in Asia

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Chinese and Japanese aluminium stocks gained on Wednesday after Norsk Hydro announced that its Alunorte alumina refinery in Brazil had reduced production to 50 per cent of capacity because of disruptions to its natural gas supply. The move added to concerns over raw material availability in an already tight aluminium market.

The announcement lifted aluminium prices and supported shares of major producers. In Hong Kong, China Aluminum Corp. rose 2.46 per cent, while its Shanghai-listed shares gained 1.02 per cent. Tianshan Aluminum climbed 3.33 per cent, Yunnan Aluminum added 1.06 per cent, Shandong Nanshan increased 1.64 per cent, and China Hongqiao gained 1.58 per cent. In Japan, UACJ rose 3.35 per cent, while Daiki Aluminium gained 0.38 per cent.

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Norsk Hydro said its gas supplier reported supply disruptions, forcing the refinery to lower production. Alunorte is one of the world's largest alumina refineries, and Hydro said output will return to full capacity once gas supplies improve.

The production cut comes as the aluminium market continues to face supply pressures. Following the announcement, aluminium prices on the London Metal Exchange (LME) rose 1.7 per cent to USD 3,373 per tonne, while Shanghai alumina futures gained 1 per cent to CNY 2,724 (USD 403.92). LME aluminium inventories have also fallen to around 250,000 tonnes, the lowest level since November 1990, reflecting tight physical supply.

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Last month, Norsk Hydro warned that the global aluminium supply deficit could exceed 900,000 tonnes if shipping through the Strait of Hormuz does not return to normal.