Bloomberg News

Rusal Says Aluminum Smelters Can Run Profitably at $1,900 a Ton

January 12, 2012

Jan. 12 (Bloomberg) -- United Co. Rusal, the world’s largest aluminum producer, said its smelters can turn a profit should prices fall to $1,900 a metric ton, while as much as 45 percent of Chinese capacity may already be running at a loss.

“Our smelters can work with $1,900 a ton,” Vladislav Soloviev, first deputy chief executive officer, said in an interview, published on Moscow-based Rusal’s Facebook page. “It’s difficult, but it can work. If it goes lower, well then we may see cutbacks.” Some of Rusal’s smelters are viable with an aluminum price as low as $1,400, he said.

Aluminum traded at $2,193 a ton on the London Metals Exchange today. The metal has advanced 7 percent since Jan. 1 after falling about 27 percent last year from its May 3 peak of $2,797. China should shut more capacity, Soloviev said, and help drive prices higher.

“In Russia, we have a lot of social issues to consider, and it’s not a good time to make cuts,” he said. “But the world, and China particularly, has room for more cuts.”

Some 40 percent to 45 percent of Chinese smelters may be operating at a loss, he said.

Alcoa Inc., Rio Tinto Group and their global rivals are cutting production after the slump in prices. Alcoa, the largest U.S. producer, reported its first loss in two years this week, and said China may use 70 percent of its capacity in 2012.

--Editors: John Viljoen, Tony Barrett

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To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net -0- Jan/12/2012 12:11 GMT


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