Alumina shares up despite Alcoa loss

Shares in Australia's Alumina have posted strong gains despite its giant aluminium producing partner Alcoa posting a large quarterly loss.

Alumina shares added three cents, or three per cent, to $1.03.

US-headquartered Alcoa on Tuesday reported a second quarter loss of $US119 million ($A131 million), which compared with a loss of $US2 million a year earlier.

But Alumina investors appear to like Alcoa's forecast of seven per cent growth in global aluminium demand this year, led by a roughly 10 per cent increase from aerospace, despite a global supply glut and continuing weak prices.

Alcoa made similar comments at its previous quarterly result in April, when it said the industry had turned around.

But since then, Alcoa has realised a near seven per cent fall in the price of aluminium, to $US2,237 a tonne, which contributed to record the $US119 million loss.

On Tuesday, the London three-month aluminium price was down to $US1,803 a tonne.

Alumina, one of the ASX's top 100 companies, has a 40 per cent stake in the Alcoa-operated Alcoa World Alumina and Chemicals (AWAC) company that has refining and smelting businesses globally, including two high employing aluminium smelters in Victoria.

Alumina, which gets its income from whatever Alcoa allocates it, said shareholders would receive $US29 million in distributions and dividends for the quarter, bringing the total for the year to $US54 million.

Alumina chief executive John Bevan said that while it was a tough quarter for aluminium prices, spot alumina prices - a key input in aluminium - had remained relatively stable.

Alcoa's alumina refining business is turning a profit, along with its aluminium products businesses-serving industry, while aluminium smelting produced a $US32 million net loss.

"Improvements in productivity and costs have seen margins remain reasonably steady for alumina," Mr Bevan said in a statement on Tuesday.

IG market strategist Evan Lucas said that despite Alcoa's predictions of an 11 per cent uptake in aluminium demand in the next 18 months, most analysts didn't like the story, with ratings downgrades already hitting producers.

"We are always going to be uncompetitive in aluminium and that's why most analysts tend to suggest you should shy away from it," he told AAP.

"The Chinese have economies of scale, do it at a lot cheaper rate than we can and we have a quite a lot of regulation coming from the environment side that the Chinese don't have to necessarily contend with."