Alcoa sees China as linchpin in aluminum market

China has been the linchpin in the global aluminum industry with its sizable production cuts and measures to boost industrial demand, steps that have brought the global market into balance despite a rapid decline in the metal price, Alcoa Inc's CEO said on Tuesday.

Speaking to Reuters Global Mining and Steel Summit, CEO Klaus Kleinfeld credited China's massive smelter production cuts of over 20 percent, which turned China into a net importer of the shiny metal, as helping to bring the global aluminum market roughly into balance.

Alcoa has a list of variables to consider before making such a move, including the smelter's cost-curve position and terms of its power contracts.

With benchmark aluminum prices on the London Metal Exchange sliding from a record high of $3,375 a ton last July to around $1,300 a ton currently, the aluminum giant has had to manage its cash position, trimming costs wherever possible.

At the same time, China has boosted demand for the metal with its giant economic stimulus package.

While some observers have been concerned that China's recent metal purchases have gone straight to inventories, Kleinfeld said that was not the case with aluminum.

Still, China holds attractive prospects for investment opportunities, the aluminum producer's chief said.

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