Higher Rail Freight Rates Push Alumina Prices to Factory Up

SHANGHAI, Mar. 14 (SMM) - The National Development & Reform Commission and Ministry of Railways revised the rail freight rates up by RMB 0.015 per metric ton-kilometer, effective February 20, 2013. Freight charges were up RMB 27/mt for Lanzhou-Xinjiang Railway Section alone. SMM believes alumina prices for shipment to west China will go up as a result.
 
There are a large number of alumina traders Shanxi, helping ease tight cash flows confronted by aluminum smelters. One trader informed SMM that its company purchases alumina in Shanxi and then ships it to aluminum smelters in Gansu, Qinghai and Inner Mongolia, with freight charges borne by the seller. Margins at local traders used to be less than RMB 100/mt, but are now almost zero because of the hike in rail freight rates. In this context, traders were forced to raise alumina prices for delivery to the factory.