New aluminium groups which could be formed from two sets of proposed multi-billion dollar mergers would control about 30 per cent of world aluminium production.

But with significant production still taking place "beyond the loop" in China, Russia and the Middle East, their market sway would not be unlimited.

The latest state-of-play has Canada's Alcan Aluminium in agreement to merge with French competitor Pechiney and Switzerland's Alusuisse-Lonza Holding AG for US$9.2 billion in stock.

World leader Alcoa Inc and investment firm Michigan Avenue Partners are battling each other to take North America's third aluminium producer Reynolds Metals Co.

On Sunday Reynolds rejected Alcoa's cash and stock offer worth a total US$5.6 billion as inadequate, swinging the attention back onto Michigan AvenuePartners' bid, which has been pitched at an undisclosed but higher price.

Analysts, base metals traders and industry officials said on Monday that the 40 percent or so of Western world capacity which the possibly merged groups would hold -- 18.2 percent for Alcan-Pechiney-Algroup and 23.8 percent for Alcoa-Reynolds -- would still be countered by Chinese, Russian and other capacity.

Nicolas Toffier of Macquarie Bank described the possible mergers as a consolidation rather than takeover of the industry. Industry consolidation through the mergers would give newly-created big groups more control of prices, he said.

But despite comments by the president and chief operating officer of the proposed merged Alcan-Pechiney-Algroup operation that amalgamation could result in plant closures, the aluminium market had still not rocketed, Toffier said.

Moves of US$10 a tonne in price were minimal compared with the scale of the planned mergers, he said. However, the aluminium market remained in an upswing phase ingeneral, with the next target US$1,500 a tonne compared with Monday's market of around US$1,470, he said. The downtrend in LME stocks was seen pushing prices above $1,500.

In the short-term aluminium still had the potential to drag prices upward in the entire base metals complex, especially if aluminium prices approached copper prices, which were at around US$1,717 on Monday. But aluminium, nickel and copper were all independently showing positive signs. Their fortunes would depend primarily on demand and on Asian recovery.

Another metals trader with close connections with Japanese importers said new merged aluminium mega-groups would not be able to control the market in primary metal, a world-wide commodity.

The mega groups, if formed from proposed mergers, would have production capacity of about seven million tonnes a year in world-wide production of 24-25 million metric tonnes a year, about 28 percent.