HONG KONG, Feb 13 (Platts) -- A combination of output cuts covering around 8% of global supply and an upturn in demand should leave the global aluminum market "almost balanced" in 2012, Russian aluminum producer Rusal said Monday.
Global primary aluminum consumption is set to grow 7% in 2012 to 48.2 million mt, while total lost aluminum production from output cuts is set to be around 3.9 million mt, or about 8% of global production, the company said.
China is expected to be the fastest-growing market, with 11% growth, followed by India (10% growth), Japan (5%), North America (5%) and Latin America (5%).
Consumption growth in Europe in 2012 is expected to be be flat to 2011 levels, the company said.
"Despite flat aluminum demand in some regions in the last six months, it remains well above the 2009 recession levels, thereby challenging expectations of a severe contraction predicted by many market participants," Rusal said in a statement detailing its 2011 production results.
"The uncertainties seen in 2011, namely the current eurozone financial crisis and slowdown or hard landing in Chinese growth, may continue to dominate the outlook for the metal markets in the months to come, with evidence of the potential recovery coming in the second quarter of 2012," the company added.
From a pricing point of view, Rusal forecasts that an improvement in demand for aluminum from the North American physical market will support the US Midwest premium at the 2011 level of 8.0-8.5 cents/lb plus LME cash, "with additional upside related to the extent of supply disruption and curtailments in the region."
The Platts Midwest Transaction premium assessment is currently set at 8.00 cents/lb.
In Europe, premiums have been under pressure across all products, with the major impact on the extrusion billet and primary foundry alloy sector, the company said.
"Stronger demand in North America as well as supply chain restocking and a continuation of warehouse/financing deals are expected to absorb primary metal excess to consumption requirements," Rusal said, adding that as a result it expects premiums to be firm over 2012 from the lows at the end of 2011.
The Platts duty-paid Good Western premium assessment is currently at $175-190/mt plus LME cash, in-warehouse Rotterdam.
In Asia, premiums reflected by the CIF MJP indicator "are expected to remain firm, at or above the 2011 year end levels on 7% regional demand growth, coupled with an expectation of curtailed supply from the traditional smelting centers in Australasia," the company said.
The Platts CIF Japan premium assessment is currently at $110-112/mt plus LME cash.
China's growth related to slower exports is expected to be offset by an easing of credit availability as the government attempts to rebalance with domestic consumption based on infrastructure and housing spending, the company said.
"For the first time since 2009, imports of primary aluminum are commercially attractive due to the arbitrage in LME and SHFE prices," Rusal said. "In 2012, arbitrage windows are expected to open periodically due to short-term supply-demand imbalances in China."