The Aluminum Corporation of China (Chalco), which holds a monopoly on China's aluminum products, has decided to raise the domestic spot price of alumina to 3,600 yuan (462 U.S. dollars) per ton, driving it closer to international levels, company sources confirmed on Friday.

The new price is 50 percent higher than the current Chinese market price.

The key factor in the price rise was short supply on both the domestic and international markets, industry observers said.

But they said the alumina price hike was temporary. In the long term, the price will drop as China's production capacity expands.

Wen Xianjun, head of the aluminum industry branch of the Non-ferrous Metal Industry Association of China, predicted that the alumina spot price would average around 2,300 yuan (295 U.S. dollars) this year.

He said China's alumina production capacity would reach 27 million tons this year, up 42 percent on the previous year, and that China's needs would amount to about three quarters of that figure.

Alumina is a white granular material, a little finer than tablesalt, and is properly called aluminum oxide. It is transformed into aluminum metal in a smelting process.

Listed on bourses in Hong Kong and New York, Chalco is the largest alumina producer in China and the second largest in the world.