ALUMINUM Corp of China reduced July alumina prices by 7 percent today to counter sluggish demands amid European debt crisis and government's tightening measures.

The company, known as Chalco, dropped the price by 200 yuan to 2,650 yuan (US$391.23) per ton. It is the second cut in a row following a 5-percent cut in June.

"Lower alumina and aluminum prices combined with the scrape of preferential power tariffs will further erode into the profitability of the company, which may record quarterly losses in the second half," Essence Securities Co wrote in a note.

Chalco, the country's top aluminum producer and the world's third-largest alumina maker, fell 1.68 percent in Shanghai trading, versus a 0.38 percent gain in the Shanghai Composite Index.

Alumina prices have headed south this year due to concerns over the world's economic recovery and overcapacity. Spot alumina prices fell by 300 yuan per ton last month. Alumina is a major ingredient in producing aluminum.

Meanwhile, the central government has cancelled preferential power price treatment for energy-intensive industries including aluminum and steel. Punitive power tariffs will also be imposed on high-polluting companies.

"Under current product prices some aluminum producers have already gone into the red. If the higher power prices spread, aluminum makers will suffer industry-wide losses," Essence Securities said.