Aluminum output may drop in the first half of next year as producers increase idled plants to as much as 15 percent of global capacity, said United Co. Rusal, the world’s largest supplier.
China, Europe and the U.S. may shut down plants, Rusal First Deputy Chief Executive Officer Vladislav Soloviev told reporters in Moscow. Unless prices rise from current levels, 10 percent to 15 percent of capacity may be shut, Soloviev said after Rusal reported earnings.
A 22 percent slump in prices from their 2011 peak of $2,797 a metric ton means 30 percent of producers aren’t profitable, Rusal said yesterday. When demand and prices weakened in 2009, smelters curbed supply by about 5 percent in the first half of the year, according to the International Aluminium Institute. Futures rallied 37 percent the following six months.
Rusal’s production costs are in line with the industry average and the company is unlikely to reduce its own output, Kirill Chuyko, a UBS AG analyst in Moscow, said by phone. The Hong Kong-listed producer may benefit from a potential price rebound as the additional capacity shuts, he said.
Rusal has declined 42 percent in Hong Kong trading since its January 2010 initial public offering in the city. Even so, the so-called cornerstone investors in the IPO remain shareholders, Soloviev said yesterday. Russian state-lender Vnesheconombank, New York hedge-fund manager Paulson & Co., Hong Kong billionaire Li Ka-Shing, Malaysian tycoon Robert Kuok and Nathaniel Rothschild were among those to buy stock.
“We always considered and continue to consider the stake in Rusal as a strategic investment,” VEB’s press-office said in an e-mailed statement last week, when asked whether the bank has any plans to sell its holding.
Rusal advanced 3.5 percent to HK$6.26 in Hong Kong yesterday, the biggest gain since Oct. 27, after reporting that third-quarter profit jumped almost 15-fold to $432 million.