The environmental impact of the supply of alumina is increasing.

With China environmental protection to be completed and shut down production capacity, is expected in the next few months alumina supply shortage could further aggravate, forcing the smelter for supply, pushing up prices.

Alumina prices have risen 73% since may, and is expected to rise further, but expected early next year, prices are likely to decline, because China's refineries in winter to resume production again after a closed factory, at the same time in other parts of the new project will be put into production.

AnthonyEveriss, a senior consultant at the British commodity research institute (CRU), said: "the alumina market is a perfect storm. Market sentiment surged ahead of the winter production cut.

China has imposed the most stringent measures on heavy industry, including aluminum and alumina factories, to combat air pollution in the winter months.

WoodMackenzie AmiShivkar, a senior analyst said, before begin the winter production, alumina buyers mainly focused on the production situation of the aluminum smelter, rather than the alumina refinery and the production of bauxite mine.

She said some smelters speculated that the supply of alumina would be oversupplied because of a drop in aluminium production and that the price would be depressed, so they delayed their purchases.

But bauxite mines unexpectedly shut down, creating a domino effect on the supply chain.

"The smelter's inventory is tapering off, but the bauxite mine is not ready," Shivkar said.

As supplies of bauxite in the smelter are running out, henan province is planning to cut alumina production two months ahead of schedule.

Fully reflecting supply shortages, Chinese imports of bauxite surged 47 per cent in August, while alumina imports surged 123 per cent.

The price of alumina has surged 53 per cent to $469.74 a tonne in the past two months, the highest level since the index was launched in August 2010, according to MetalBulletin's Australian offshore price index.

"I think there is still some upside," Shivkar said. None of China's refineries have the number of bauxite supplies they want, and smelters are still hoarding supplies.

The CRU expects production to fall by 1.2m tonnes this year, while jpmorgan expects output to fall by 1.5m tonnes.

"But there is still the risk of additional capacity shutdowns," says Everiss. Some cities in Shanxi Province are not listed, while shanxi has many alumina refineries.

He added that unconfirmed reports that the city and the city of luliang would implement production cuts with a capacity of 12m tonnes of alumina.

Analysts said that although alumina prices were expected to remain high before the spring, prices could fall after the winter production cut in mid-march.

Alumina refineries are recovering more quickly than aluminum smelters, and the launch of new alumina plants outside China will further boost global supply.