Alumina shares are sitting on the fence on Tuesday …
The post Alumina (ASX:AWC) share price flat despite potential tailwinds for bauxite appeared first on The Motley Fool Australia. –
The Alumina Limited (ASX: AWC) share price opened flat on Tuesday despite potential tailwinds for the global bauxite and aluminium market.
At the time of writing, the Alumina share price is unchanged from yesterday’s close of $2.06.
Alumina share price lower despite global supply concerns
A military coup in the West African nation of Guinea has sparked concerns about potential shortages in the global supply of bauxite, the world’s main source of aluminium.
The Australian reported that Guinean soldiers have managed to close both land and air borders, suspended the constitution and detained the president.
The report quotes Commonwealth Bank of Australia (ASX: CBA) mining and energy commodities analyst Vivek Dhar who said, “If the political instability in Guinea disrupts its bauxite exports, we expect bauxite prices to lift. Australia stands to benefit the most given its position as the world’s second-largest bauxite explorer.”
The Alumina share price has already surged 14.65% in September, fueled by potential aluminium shortages in China.
Reuters reported that top producers in China are facing tough power controls amid increasing government oversight of highly polluting industries.
The drag on output is having an impact on aluminium prices with the most-traded October aluminium contract on the Shanghai Futures Exchange closing near 14-year highs of US$3,311/t last week.
Alumina’s bauxite outlook
According to Alumina’s half-year results, China’s demand for imported bauxite is expected to grow steadily in the short-to-medium term.
The company said, “Around 60% of China’s bauxite consumption is based on imported bauxite in 2021. Guinea will continue to be the main bauxite supplier to China, followed by Australia and Indonesia.”
Why is the Alumina share price flat on Tuesday?
The Alumina share price is sitting on the fence on Tuesday despite the potential tailwinds for the bauxite market.
One potential concern could be the company’s interest in the bauxite mining company, Halco Inc, located in northwest Guinea. That said, Halco makes a relatively small contribution to group bauxite production. According to the company’s website, its annual production in 2019 was approximately 3 million dry metric tonnes.
The Alumina share price has also surged very quickly in a short span of time. Investors might be using the news as a catalyst to sell into.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.