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    Rusal to keep aluminium output flat

  • China Aluminium Network
  • Post Time: 2014/10/24
  • Click Amount: 367

    Russian aluminium giant Rusal plans to keep output largely flat for three years because healthy stock levels will ensure the market is supplied despite market deficits, a top executive said on Wednesday. Robust aluminium prices have prompted some Chinese smelters to abandon production cutbacks and some investors fear restarts at other plants would chip away at what was expected to be the first global deficit after years of oversupply.

    "We still have enough stocks on the market, so we don't see any reason to restart production," Oleg Mukhamedshin, deputy chief executive, told Reuters in an interview. "I see production flat, stable for at least three years." Surpluses over the past several years have left the global market awash in inventories, including about 4.5 million tonnes at warehouses monitored by the London Metal Exchange (LME) and at least an equal amount in non-LME storage depots, analysts say.

    Oversupply in past years has weighed on the LME benchmark aluminium price, which has shed nearly 30 percent since touching a peak of $2,803 a tonne in May 2011. The weak prices prompted cutback by producers, including Rusal, which has cut capacity by 12 percent or 650,000 tonnes since 2012. It was not attractive to restart many of the plants because they are old and outdated, he added.

    United Company Rusal Plc, the world's biggest aluminium producer, had potential for 150,000 tonnes of new capacity from a new project by the end of next year, Mukhamedshin said. Looking at the global market, he said restarted capacity in China was not a worry because the output was being absorbed by buoyant consumption there, which is expected to jump 13 percent this year to 28 million tonnes.

    The combination of strong global demand from the auto and aerospace sectors plus capacity cutbacks has led to the market moving to a deficit of 1.4 million tonnes this year, Rusal has said. Mukhamedshin said higher dividends from Norilsk Nickel would help Rusal to reduce its debt burden. Norilsk, part owned by Rusal, said on Wednesday its management had recommended to pay $2.78 billion in interim dividends for the first nine months of 2014.

    Source: http://www.alcircle.com
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