International aluminum price ***

Demand for aluminum products in Europe will increase by 7%

SMM network news: Russia's RUSAL, the world's largest aluminum producer, plans to cut production to support high aluminum prices. RUSAL told Reuters that if China also cut production in 2013, international aluminum prices will rebound.

According to Reuter, Oleg Mukhamedshin, head of RUSAL's stock and company development department, “Only 30% of producers can make profits under current aluminum prices, which means that people will be forced to reduce capital expenditures, which will lead to stagnant growth in the industry.”

At the end of last year, aluminum prices fell to the lowest point in 18 months due to concerns about the reduction in global metal demand.

Today, aluminum prices have fallen by 5% from the end of last year, which prompted RUSAL to reduce its production capacity by 25,000 to 30,000 tons this year.

However, RUSAL also hopes to take measures to support international aluminum prices.

Mukhamedshin said: "Aluminum prices have been falling for quite a long time. All manufacturers have the responsibility to adjust production and take the initiative to cut unnecessary production capacity, especially China."

Some time ago, media reported that Henan, the largest aluminum producer in China, may compensate for the loss of manufacturers by subsidizing electricity bills.

Mukhamedshin criticized this policy. He hopes that China can reduce excess capacity. Mukhamedshin estimates that China has about 6-7 million tons of aluminum production without any profit.

Since the end of last year, international manufacturers other than China have cut 1.3 million tons of production capacity.

Mukhamedshin said that last year China cut its production capacity by 1.7 million tons, but this year it did not reduce its production capacity. At present, China's aluminum production accounts for 45% of the world's total.

He said that if the producer is more responsible, the aluminum price in 2013 may increase to 2500-2600 US dollars per ton. This year's expected aluminum price is 2,200 US dollars per ton.

At the end of last year, Morgan Stanley had made predictions that the trend of aluminum prices this year will be more optimistic, because the current aluminum prices have already fallen below the marginal cost, and high-cost producers are reducing their production capacity. Damao predicts that the average price of aluminum in 2012 will be US$2,300 per ton.