* Alumina annual term offers made at 17.8-18.5 pct of LME aluminium prices -sources
* Some deals done at 17.8 pct -sources
* But many smelters think too high, prefer short-term or spot shipments
HONG KONG, Nov 28 (Reuters) - Some aluminium smelters in China, the world's top producer and consumer of the metal, could in 2014 turn to spot shipments or short-term contracts for raw material alumina as the ratios used to calculate annual term contracts climb, trading sources said.
Smelters are effectively betting on low spot prices for alumina, although - ironically - rising demand for spot imports could support prices for the raw material, in turn buoying prices for aluminium that are stuck near 4-year lows.
China churns out nearly enough alumina to meet its current aluminium-production needs, but more smelting capacity is expected to come online next year, making some smelters and traders keen to secure imports. About 2 tonnes of alumina are used to produce 1 tonne of metal.
Global sellers had last month offered China buyers 2014 alumina shipments at ratios of 17.5-17.8 percent of London Metal Exchange (LME) aluminium prices , free on board, traders and sources at Chinese smelters said. Offers were raised to 17.8-18.5 percent in the past week for Australia and India origins due to uncertainty over the outlook for supply.
Two sources said some deals had been agreed at 17.8 percent, compared to 16.1-16.3 percent in 2013.
A rate of 17.8 percent of Thursday's LME aluminium price of $1,758 would work out at $313 per tonne of alumina, FOB. While that was well below spot prices of about $326 last week, some buyers are betting that spot prices will fall.
Most Chinese alumina importers and sellers were still in talks on 2014 shipments, with both sides assessing the impact on global supply of Indonesia's planned ban on ore exports next year and the uncertain outlook for Rio Tinto's Gove alumina refinery in Australia, the smelting sources said.
Indonesia provided nearly 70 percent of China's bauxite imports in the first 10 months of this year. Alumina is produced from bauxite, before being refined into aluminium.
Rio Tinto said this week it was reviewing the future of its loss-making Gove refinery, which produced 1.6 million tonnes of alumina in the first nine months of 2013.
An executive at a medium-sized smelter said his firm was not willing to pay more than 17.5 percent of LME aluminium prices for annul shipments for 2014, after one-month ago agreeing 17.2-17.3 percent for shipments in the first quarter of next year.
"Some smelters that don't have stable supplies or plan to start new capacity are willing to take full-year," he said.
"We are more interested in securing imports in the next four to five months."
He added that the smelter did not want to hedge the LME metal price for one year due to high financing costs and the wide spread between forward and nearby prices, now at $47 per tonne for 3 months.
A buyer for a large aluminium smelter said the firm was willing to pay 17.8 percent for shipments only in the first half of 2014.
"We would sign full-year shipments at 17-17.5 percent based on current LME aluminium prices. There is no point signing too high as we can always buy spot shipments," he said.
Separately, the executive said the firm had received an offer of 17.5 percent of aluminium prices on the Shanghai Futures Exchange <0#SAF:> from Aluminum Corp of China Ltd , the top alumina producer in the country, for domestic term 2014 shipments, up from the 17-17.2 percent the producer agreed with Chinese smelters in 2013.
The rate of 17.5 percent of Thursday's front-month Shanghai aluminium contract price of 14,205 yuan would work out at 2,486 yuan ($410) per tonne of alumina, compared with spot prices of about 2,500-2,550 yuan for locally produced alumina. ($1 = 6.0924 Chinese yuan)
(Reporting by Polly Yam; Editing by Joseph Radford)