Here’s why Alumina Limited’s (ASX:AWC) shares are trending today

Highlights

  • Shares of Alumina Limited (ASX:AWC) are currently trading near 18-month high levels.
  • AWC is engaged in bauxite mining, aluminium smelting, and alumina refining.
  • Prices of Guinea bauxite hit 18-month highs on Monday in China due to supply concerns.

Shares of the world’s largest alumina and bauxite producer, Alumina Limited (ASX:AWC), are currently trading near 18-month high levels. Shares of the company surged by 14.04% in the last five days to trade at AU$2.035 per share as of Tuesday afternoon.

The shares started an uptrend from mid-August, though share prices shot up early on Monday morning by nearly 9% within the initial few minutes of trade. AWC has given a mind-blowing return of 32.25% in the past year.

Why are Alumina’s shares touching the sky?

Notably, AWC is engaged in activities related to the bauxite mining, aluminium smelting, and alumina refining. 

The recent surge in the share prices of one of the leading bauxite producers of the world is not associated with any significant announcement or any update provided by the company. The prices are touching new heights due to a surge in the prices of aluminium and bauxite.

Must Watch: Is 2021 going to be a sparkling year for aluminium?

Initially, Alumina’s share prices were pushed due to the potential shortage of Aluminium in China. Aluminium prices recently reached almost 10-year high levels to trade at US$2,740 per tonne in September.

The political unrest in Guinea, one of the leading suppliers of bauxite in the world, has led to a supply crunch in the global market. Bauxite is used as a raw material to produce aluminium.

Additionally, China has also squeezed smelting activities to reduce its carbon footprints as part of the country's long-term goal to attain carbon neutrality by 2060.

Apart from this, an inadequate coal supply in India, the world's second-biggest producer of aluminium, has further created a deficit in the market, pushing prices even higher.

Related Article: Carbon Neutral Goal Setting By Multinational Brands

Skyrocketing bauxite prices

Prices of bauxite hit 18-month highs on Monday due to supply concerns in China, followed by a military coup in Guinea. However, shares of AWC didn’t get a considerable push from the skyrocketing bauxite prices.

Aluminum Wire on Brushed Aluminum Sheet Metal Representing Commodity Price Growth |Source: © Vitezslavvylicil | Megapixl.com

One potential reason behind the cool response of AWC’s shares could be a relatively small contribution of Halco Inc, Alumina's bauxite mining company, located in Guinea. Since Halco makes a small contribution to the group's overall bauxite production, Alumina’s share prices are not significantly affected by escalating bauxite prices.

Also Read: This is how Alcoa Corporation’s quarterly result will impact Alumina Limited

Bottom Line

Share prices of Alumina Limited got a considerable push from the skyrocketing aluminium prices amid a potential shortage in China. Shares of the company are trending due to a rapid surge in Guinea bauxite prices.

Shares of the world’s largest alumina and bauxite producer, Alumina Limited (ASX:AWC), are currently trading near 18-month high levels. Shares of the company surged by 14.04% in the last five days to trade at AU$2.035 per share as of Tuesday afternoon.

The shares started an uptrend from mid-August, though share prices shot up early on Monday morning by nearly 9% within the initial few minutes of trade. AWC has given a mind-blowing return of 32.25% in the past year.

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