Rusal Is Still Considering Shutting Smelters as Aluminum Falls

United Co. Rusal, the world’s largest aluminum producer, is still looking at the possibility of closing smelters as prices decline.

“Decisions have not been made yet,” Vladislav Soloviev, Rusal’s first deputy chief executive officer, said today in the southern Chinese city of Shenzhen. “We’re still thinking what kind of smelters, which regions, could be closed.”

Aluminum for three-month delivery has declined 24 percent on the London Metal Exchange in the past 12 months. The metal averaged $2,219 a metric ton on the LME in the first quarter, 12 percent less than a year earlier.

Alcoa Inc. (AA), the largest U.S. aluminum producer, cut 12 percent of capacity in January and Chief Executive Officer Klaus Kleinfeld said April 11 the reductions “may not be the end.” Rusal may lower output by 6 percent in the next 18 months, Chief Executive Officer Oleg Deripaska said in January.

Rusal today opened its aluminum trading venture in Shenzhen with China North Industries Corp., also known as Norinco. Rusal has an initial sales contract with the venture for 24,000 tons, mainly for ingots, Rusal’s Director for International Sales Steve Hodgson said today.

The company’s sales to China may be between 50,000 tons and 100,000 tons this year and may increase to as much as 500,000 tons in the “long term,” Hodgson said. China’s aluminum consumption will grow at an annual rate of 10.5 percent to 27.5 million tons by 2015, slowing from the 17.2 percent rate during 2005 to 2010, he said in Shanghai yesterday.

Rusal shares gained 2.6 percent in Hong Kong trading today, compared with the 0.8 rise in the benchmark Hang Seng index. The stock has advanced 14 percent this year.

--Helen Yuan and Michelle Yun. Editors: Indranil Ghosh, John Chacko

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan in Hong Kong at rkeenan5@bloomberg.net

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