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(AMM) Alcoa pushes new alumina pricing

July 14, 2010 - 23:12 GMT Location: NEW YORK

KEYWORDS: Alcoa , alumina

Alcoa Inc. is changing the way it prices alumina as its long-term contracts come up for renewal, according to chairman and chief executive officer Klaus Kleinfeld.

The Pittsburgh-based company's long-term supply contracts had priced alumina as a percentage of exchange-traded aluminum, but as its multiyear contracts cycle through for renewal the company is pushing customers toward higher, non-LME-linked prices.

"We have changed the pricing mechanism to basically more appropriately reflect market conditions as well as underlying costs, and this has yielded a higher price per percentage of LME," Kleinfeld said during the company's second-quarter conference call.

Alcoa said repeatedly in the past that the LME-linked alumina pricing mechanism did not accurately reflect the actual cost of production.

"Over the past decade, the LME price and the cost inputs of alumina did not move in tandem. We believe that it's...

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