Wednesday, May 5, 2010

Alcoa (NYSE:AA), Alumina (NYSE:AWC), BHP (NYSE:BHP), Want to Change Alumina Pricing Model

As the spot market for alumina grows, aluminum producers like Alcoa (NYSE:AA), Alumina (ASX:AWC) (NYSE:AWC) and BHP (ASX:BHP) (NYSE:BHP) want the pricing model to reflect those changes.

Under the current alumina pricing model, alumina prices are set at a fixed percentage of aluminum prices, which for contracts in 2010 stand at close to 15 percent.

What the aluminum producers want is something similar to the iron ore pricing changes, where they better mirror the supply and demand realities, along with costs.

Alcoa is pushing for a new pricing system where an index is created which would be based on spot transactions.

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