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UPDATE 1-Rusal Expects $2,400-$2,700/T Aluminum Next Year
Jul 7,2010 08:48CST
industry news

LONDON, July 7 -- Russia's UC RUSAL (0486.HK: Quote) (RUAL.PA: Quote) expects aluminum prices to be $2,400/$2,700 a tonne next year due to increased demand and lower capacity, Chief Executive Oleg Deripaska said on Tuesday.

LME three-months aluminum futures CMAL3 were trading at about $1,988.25 a tonne at 1330 GMT on Tuesday.

The company, the world's largest aluminum producer, also expects a global surplus of the metal, used in packaging, construction and cars, of 500,000 to 700,000 tonnes this year, Deripaska said at an event in London.

Royal Bank of Scotland in a recent research note forecast an aluminum surplus of 1.5 million tonnes in 2010, compared with 3 million last year. It forecasts a surplus of 350,000 for 2011, and a deficit the following year.

"Demand is very strong," Deripaska said. "We hope that by the middle of next year the market will be balanced."

He said he was optimistic about future demand due to strong car sales growth in China, the world's top metals consumer and a leading aluminum producer.

"We are more optimistic because we believe that China will generate more demand," he added. "We can't see that people will stop coming from rural areas to the cities."

RUSAL produced about 3.9 million tonnes of aluminum last year, or around 10 percent of global production. It plans to boost output by 3 percent this year as the market improves after a slump that prompted it to cut output in 2009.

The company has the capacity to produce 4.6 million tonnes a year of aluminum, not including the new capacity that will be added when two smelters in eastern Siberia, Boguchany and Taishet, come on stream next year.

In late June, Deripaska said RUSAL would supply up to 1 million tonnes of aluminum for the first aluminum-backed exchange-traded fund, expected to be launched before the end of the summer.

Deripaska said on Tuesday it could take as long as the first-quarter of next year to supply the 1 million tonnes.


On his battle for control of Norilsk Nickel (GMKN.MM: Quote) with Interros' Vladimir Potanin, Deripaska said he believed RUSAL could restore its position on the board of Norilsk. Each company controls slightly more than a quarter of Norilsk.

Last week, RUSAL boycotted the election of a chairman at Norilsk after winning one fewer seat on the Norilsk board than Interros.

RUSAL, which believes that the results had been manipulated, said it would seek to convene an extraordinary shareholders meeting.

RUSAL's purchase of a stake in Norilsk two years ago was seen as a precursor to a hostile takeover of Norilsk by Deripaska, but the global crisis forced the tycoon to scrap the plan as he battled for the survival of his own empire.

Deripaska said on Tuesday the boardroom problems arose over policy agreements previously arranged with Interros, such as a $3 billion dividend, marketing, merger and aquisition strategies, and the management structure.

"They (Interros) decided that they are maybe not up to it (the agreement) -- we will convince them once more," Deripaska said on Tuesday. "We believe that we can restore RUSAL's position on the board. (Former Chairman) Voloshin will be elected at the next shareholder meeting."

A RUSAL spokesman said that at no stage had RUSAL wanted to elect Deripaska as chairman of the Norilsk board.



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