(Adds analyst expectations, detail on costs, market conditions)

Feb 21 (Reuters) - Century Aluminum Co reported a smaller quarterly loss on Thursday as its costs fell and said it saw a modest improvement in market conditions.

The Monterey, California-based company, which operates aluminum plants in the United States and Iceland, said China's economy seems to have, at minimum, stabilized.

Cost of goods sold fell to $301.1 million in the fourth quarter to Dec. 31 from $331.8 million a year earlier, when that figure included a $6.3 million charged related to the value of the company's inventory.

Chief Executive Michael Bless said in a statement that each of the company's plants reduced its cost base in 2012.

Century's net loss narrowed to $6.9 million, or 8 cents a share, compared with a loss of $31.1 million, or 35 cents, a year earlier.

Analysts, on average, had expected a loss of 14 cents, according to Thomson Reuters I/B/E/S.

Sales slipped to $317.7 million, slightly less than expected, from $318.2 million.

Shipments of primary aluminum rose to 162,303 tonnes from 155,649 tonnes.

(Reporting by Allison Martell; Editing by Phil Berlowitz) Keywords: CENTURYALUMINUM RESULTS/

(allison.martell@thomsonreuters.com)(+1 416 941 8196)(Reuters Messaging: allison.martell.thomsonreuters.com@reuters.net)

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