Metal Bulletin’s daily fob Australia alumina index settled at $556.67 per tonne on April 13, up 16.7% compared with the previous day’s calculation, and the highest number recorded since the index launched in August 2010.

The US Department of the Treasury placed sanctions on UC Rusal on April 6.

On Thursday April 12, the Russian company was reported to have declared force majeure on some of its alumina shipments, prompting buyers to hike their bids in an effort to secure units.

“A buyer suddenly bid [above $500] yesterday, and I was almost tempted to sell the cargo. Then, five minutes later, I found out why. It is just crazy,” an Asian supplier said.

The latest rally in alumina prices comes on top of a high base; spot prices had already risen 36.4% between March 1 and April 12, as a result of market tightness caused by the force majeure at Hydro’s Alunorte alumina refinery. Hydro was ordered to operate Alunorte at 50% of its capacity in late February, after concerns that severe rainfall in Brazil’s northern state of Pará had resulted in water contamination.

With April 13’s price gains taken into account, alumina prices are up 59.1% since March 1, with the Rusal force majeure accentuating already-emerging tightness and taking out the option for a substitute to Hydro material in the Atlantic.

China is expected to start exporting units in the coming weeks, in order to take advantage of the stark price difference between the seaborne and domestic market.

Metal Bulletin's Chinese free-market price assessment for alumina stands at 2,700-2,750 yuan ($430-438) per tonne on a delivered-duty-paid basis.

But, as a result in the sudden spike in international prices, resellers from the Pacific region are taking a more cautious approach to their offer prices. Some intend to link their sales price to an index - such as that published by Metal Bulletin - rather than offer a fixed price, since their long-term contract pricing mechanisms will mean they incur higher procurement costs.

“We will resell the materials, but we intend to link the sell price on the index together with a premium instead of a fixed price, so that we won’t risk losing money in the end,” an Asian trader said.