Alumina Ltd. (NYSE:AWC) had a huge six month, as it soared past the earnings last year in the same half by 11 times, increasing from $4 million to $44 million. Analysts had been expecting $37 million in earnings.
Driving the resurgence were a huge spike in sales volume and surging metal prices.
According to Alumina Chief Executive Officer John Bevan, “Global alumina demand is forecast to grow at 12 percent for 2010 and pricing has improved.”
Alumina is in a joint venture with aluminum giant Alcoa (NYSE:AA) named AWAC, which produces about 25 percent of the world's alumina supply.
In 2010, AWAC is projected to produce close to 15.6 million tons of alumina, a slight downward revision of 200,000 tons.
Going forward, Bevan expects alumina to decouple from the aluminum price and reflect more closely the market where alumina is sold by traders, which now accounts for 40 percent of the overall market.
Under normal and past conditions, alumina prices were set based at a fixed percentage of aluminum prices.
Over the next several years that's expected to change. Bevan says he supports that because the current pricing mechanism doesn't include the costs of production, and that needs to be changed.
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