United Co. Rusal (486), the world’s largest aluminum producer, said the euro currency crisis may cause a “cyclical panic” in commodity markets, prompting a decline in metal demand from smaller manufacturers.
A concern for the industry is “how quickly the euro goes down and what’s the transition mechanism in China,” Rusal Chief Executive Officer Oleg Deripaska said in a Bloomberg Television interview. Smaller customers may be affected more than larger companies and may reduce orders next year, he said.
Commodity prices have dropped on mounting concern that Europe’s sovereign debt crisis will cripple the global economy and curb metals demand. Signs of increased funding stress in the region have helped drive the dollar to the highest since January against the euro, which has fallen by about 13 percent against the U.S. currency since the debt crisis began two years ago.
Prices for aluminum, used in beverage cans, cars and airplanes, have fallen 29 percent from this year’s May 3 high of $2,797 a metric ton.
Declining prices help create a “healthy environment” to close the gap between oversupply and demand, Deripaska said. Low prices may force as much as 3 million metric tons of aluminum capacity to be closed or mothballed, restoring the balance, he said. “People like commodities with the shortage trends.”
Prices won’t fall to the $1,300 a ton seen after the global financial crisis in 2009, according to Deripaska. “That’s impossible,” he said.
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