Rusal expects global aluminum market to be balanced in 2012
MOSCOW. March 19 (Interfax) - UC Rusal, the world's largest aluminum producer, forecasts 7% growth in global primary aluminum consumption in 2012 to 48.2 million tonnes which, against an expected 2%-3% reduction in global supply, will lead to a balancing of the market, the company said in a press release.
"UC Rusal expects that the uncertainties seen in 2011, namely the current eurozone crisis and the slowdown or hard landing in Chinese growth, may continue to dominate the outlook for the metal markets in the months to come, with evidence of a potential recovery emerging in the second quarter of 2012," the press release said.
"UC Rusal expects that the supply/demand balance, coupled with positive metal financing conditions, should support LME aluminum prices, as well as regional premiums during 2012," the press release said.
Rusal thinks aluminum will trade at $2,200-$2,400 a tonne in 2012, its foreign sales director, Steve Hodgson, said during a conference call. The metal traded at $2222.5 a tonne on the LME on Monday.
Last year, the average aluminum price stood at $2.395 per tonne, or 10% above its 2010 level.
According to Rusal's forecast, China will be the largest growing market (11%), "followed by India (10% growth), Russia/Commonwealth of Independent States (CIS) (6% growth), Japan (5% growth), North America (5% growth) and Latin America (5% growth). It is expected that aluminum consumption in the eurozone during 2012 will be flat, remaining at 2011 levels," the press release said.
Rusal intends to maintain its aluminum production in Q1 2012 at the same level of Q1 2011. In January-March of last year, it turned out 1.014 million tonnes of the metal.
Previously, Rusal's General Director Oleg Deripaska said that the company does not rule out closing capacities and lowering aluminum production by 6% by the middle of 2013 compared with 2011.
Asked which smelters might see output fall, Oleg Mukhammedshin, director for corporate development, said during the conference call: "We can't yet name any specific smelters, we're still looking at a number of options, but clearly it would be those enterprises that are located in European Russia."
Electricity makes up 28% of the cost aluminum. The Siberian smelters have a competitive cost structure than the smelters in western Russia, where electricity costs more and the situation is more complicated.
Rusal says in a presentation for investors that the average electricity tariff, including payment for electricity, capacity and transmission, was 3.48 cents per kilowatt in 2011 as a whole, but 3.2 cents in Q4.
Mukhamedshin said he hoped the tariff would fall in 2012 or at least be steady.