Russia's Rusal expects some US high-cost aluminium firms to cut production in the coming months, which could support hard-hit prices, while Rusal itself is still considering trimming its output, an executive said on Monday. Analysts say cutbacks and closures are desperately needed to rebalance the aluminium market, weighed down by overproduction and inventories.
Benchmark aluminium on the London Metal Exchange has slid 15 percent so far this year to around $1,575 a tonne and has shed 44 percent since touching a peak of $2,803 in May 2011. About a quarter of aluminium capacity outside of top producer China is currently loss-making, with a heavy impact in the United States, said Steve Hodgson, chief executive of marketing for Rusal. "I tend to see there will be cuts, in the US particularly, and that will give prices support in the near term," he told Reuters.
"I don't see any reason why we should see another leg down in prices if common sense prevails. I believe the cuts should be in the short term." Many of those smaller producers with costs of $1,800 to $1,900 a tonne are likely to have hedged production a year ago when prices were around $2,000, but those contracts will soon be running out and putting them under pressure, he added in an interview during the LME Week industry gathering in London. Rusal, the world's biggest producer, is making money at current prices but has repeatedly said it might reduce its own output by about 200,000 tonnes to support the market. Hodgson said the company was still evaluating the situation.
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