National Aluminium Co., India’s third-largest producer, increased its alumina capacity 33 percent to boost exports and tap global demand for the raw material used to make the lightweight metal.
Capacity at the Damanjodi refinery in the eastern state of Orissa was expanded to 2.1 million metric tons from 1.58 million tons, Production Director A.K. Sharma said today in a telephone interview. The additional output will start on Aug. 1 and stabilize in a month, he said.
Rising incomes and public works in China and India, the fastest growing major economies, are driving consumption of aluminum, used in everything from aircraft to beverage cans. Japan, Asia’s largest aluminum importer, is placing more orders as the nation rebuilds from its worst earthquake and tsunami. Alumina prices have risen 20 percent from start of this year until May 27, according to Metal Bulletin.
National Aluminium, based in the eastern city of Bhubaneswar, exported 702,554 metric tons of alumina in the year ended March 31. Shipments fell in the last two years as the company used more alumina to feed a 40 percent increase in smelter capacity. Bauxite is turned into alumina that in turn is refined into aluminum.
National Aluminium shares fell 1 percent to 78.15 rupees at the close of trading in Mumbai. The stock has declined 20 percent this year, compared with a 10 percent drop in the benchmark Sensitive Index.

German aluminum output of 428,369 tonnes between January and May was up 5.3% from the same period a year earlier.

Mr Christian Wellner MD of GDA said that “The outlook for aluminum remains optimistic because customer industries are also continuing to develop positively. Germany’s aluminum industry is confident that production growth will continue in the H2 of 2011.

Preliminary GDA data showed that German January to May production of primary aluminum rose by 21.9% to 180,632 tonnes. Output of secondary aluminum smelters declined by 4.3%. Production of aluminum products is also rising. Output of rolled products increased by about 4.3% to 814,637 tonnes. Extrusion press producers raised output by 11.8% to 255,847 tonnes.

Aluminum prices on the Shanghai Futures Exchange continued to soar on Thursday as investors eyed the metal as an alternative to copper.

The most active aluminum contract, for October delivery, rose about 1.4 percent to settle at 18,455 yuan ($2,860.58) per ton. The contract was up 4.9 percent since the previous Friday, far more than other base metals. For example, the most traded SHFE copper contract was up 1 percent for the week.

Aluminum fundamentals have been strong lately, which has attracted speculators betting that prices will rise, according to Tong Changzheng, an analyst at Huatai Great Wall Futures.

Over the last few months, several analysts have told the Global Times that aluminum’s fundamentals are the strongest of the SHFE-traded base metals.

Some analysts have suggested that copper prices above 70,000 yuan per ton are just too high for most buyers, especially amid the current dour global economic landscape.

The October delivery copper contract slipped about 0.2 percent on Thursday to settle at 72,710 yuan per ton, bouncing back after falling 0.6 percent when the market opened.

The benchmark three-month copper contract on the London Metal Exchange lost 0.4 percent in Wednesday’s session, before inching up on Thursday. It was trading at $9,792 per ton, up 0.1 percent when the SHFE closed.

With a limited upside for copper, investors may have turned to aluminum.

But if this is the case, it won’t be much of a trend. SHFE aluminum rapid rise this week is based on a favorable short-term supply and demand basis, said an analyst surnamed Yuan with Shanghai East Asia Futures.

“Right now, investors show a preference for a short-term imbalance between supply and demand because of the bleak economic prospects,” Yuan said.

Zinc for October delivery slipped 0.1 percent to settle at 19,010 yuan per ton. The September delivery lead contract gained about 0.5 percent to settle at 17,645 yuan per ton.

China’s Ministry of Environmental Protection has ordered East Hope Group’s alumina refinery in Henan province to shut down production facilities that had not been approved.

The ministry said East Hope (Sanmenxia) Aluminium, the alumina arm of the large aluminium and agricultural products group in China, had been given approval to build annual capacity of 700,000 tonnes in two phases in Sanmenxia city in the central province. But the refinery had built extra 400,000 tonnes of capacity without an additional approval, according to a statement posted on the ministry website on Thursday.

The refinery also had added another two phases in the construction of alumina capacity and four power generators that all had not been approved by the ministry, the statement said.

The ministry ruled that East Hope (Sanmenxia) had to shut down units with 400,000 tonnes capacity and the added two phases of alumina production capacity. The refinery was also fined 100,000 yuan, said the statement dated May 23.

The statement did not disclose the total capacity involved and the timeframe of closure.

East Hope Group’s metal arm operates the alumina refinery in Henan and an aluminium smelter in Inner Mongolia in the north.

The group’s website does not provide capacity of the alumina and aluminium plants.

Industry sources estimate East Hope’s alumina refinery has more than 2 million tonnes of annual capacity and the aluminium smelter has about 1 million tonnes.

China, the world’s top consumer of alumina used to produce primary aluminium, has more than 41 million tonnes per year of alumina capacity.

China’s Henan Xichuan Aluminum has raised its primary smelting capacity to 200,000 mt/year, which is an increase of 54% from its previous capacity of 130,000 mt/year, a company source said Wednesday.

“The government’s power rationing in the fourth quarter of last year kept us from raising capacity then, but the situation has improved and we’ve started up all the potlines this month and have now reached full capacity,” the source said.

The company now expects to produce about 170,000 mt of aluminum in 2011, which is a sharp jump of 70% from the 100,000 mt achieved in 2010.

“Actual output last year was also affected by the power issues at the year-end,” the source said.

Henan Xichuan sources alumina feed for its smelting operations from Henan refiners, on both a term and spot contract basis.