Alumina soars despite Alcoa loss

Shares in Australia's Alumina have posted strong gains despite its giant aluminium-producing partner Alcoa posting a large quarterly loss.

Shares in Australia's Alumina have posted strong gains despite its giant aluminium-producing partner Alcoa posting a large quarterly loss.

US-headquartered Alcoa on Tuesday reported a second-quarter loss of $US119 million ($131 million), compared with a loss of $US2 million a year earlier.

But Alumina investors appear to like Alcoa's forecast of 7 per cent growth in global aluminium demand this year, led by a roughly 10 per cent increase from aerospace, despite a global supply glut and continuing weak prices.

Alumina added 3ยข to $1.03.

Alcoa made similar comments at its previous quarterly result in April, when it said the industry had turned around.

But since then, Alcoa has realised a near 7 per cent fall in the price of aluminium, to $US2237 a tonne, which contributed to the record $US119 million loss. On Tuesday, the London three-month aluminium price was down to $US1803 a tonne.

Alumina, one of the ASX's top 100 companies, has a 40 per cent stake in the Alcoa-operated Alcoa World Alumina and Chemicals (AWAC) company that has refining and smelting businesses globally, including two high-employing aluminium smelters in Victoria.

Alumina, which gets its income from whatever Alcoa allocates it, said shareholders would receive $US29 million in distributions and dividends for the quarter, bringing the total for the year to $US54 million.

Alumina chief executive John Bevan said that while it was a tough quarter for aluminium prices, spot alumina prices - a key input in aluminium - had remained relatively stable.

Alcoa's alumina refining business is turning a profit, while aluminium smelting produced a $US32 million net loss.

"Improvements in productivity and costs have seen margins remain reasonably steady for alumina," Mr Bevan said on Tuesday. AAP

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