Rusal Optimistic towards 2013 Aluminum Prices, Bright Outlook for Aluminum Processing Expected after Chinese New Year

SHANGHAI, Feb. 17 (SMM) –

Rusal CEO Expects Aluminum Prices to Beat Forecasts in 2013 as Capacity Is not in Surplus 
Oleg Deripaska, CEO of Rusal said February 4 that aluminum prices will beat forecasts this year as aluminum industry has eventually gotten rid of overcapacity which has been haunting this industry for years. Deripaska added that high aluminum prices once attracted numerous investors, leading to overcapacity.

Increasing Orders Presage Bright Outlook for Aluminum Processing Markets
Aluminum processors cut or halted production before the Chinese New Year, leaving aluminum market quiet.

SMM revealed the following insights based on surveys of aluminum processors. First, domestic aluminum prices will remain depressing during 1Q since national aluminum inventories are expected to grow significantly after the holiday and as downstream producers will not resume normal production until at least March. Second, producers of industrial aluminum extrusion have received orders from high-speed railways and metros after waiting for over a year, suggesting the positive impact from government investment has finally trickled down to manufacturers. However, the outlook is not completely optimistic since the scale of investment remains unknown and time is still needed for the full impact to materialize. Third, SMM expects no strong growth in demand for domestic aluminum semis during 1H 2013. Nevertheless, the existing SHFE/LME aluminum price ratio will allow opportunities for aluminum semis exports, which should help ease growing capacity pressure at domestic aluminum processors.

Australian Alumina Output Down due to Heavy Rains, But Prices Hit New High
Rio Tinto suspended production at its 3.4 million mt/yr Yarwun alumina plant as heavy rains triggered by cyclone whipped northeast Australia. Meanwhile, output at Queensland-based Gladstone alumina smelter also declined. Out of concerns over tight supplies of Australian alumina, the FOB price of West Australian alumina were raised to USD 348/mt last week, a new high since January 2012.

Shanxi Guanlu Relists February 8 by Substituting Rare Earth for Aluminum
Shanxi Guanlu issued a notice February 1 that it would relist on February 8 by replacing aluminum and aluminum deep processing segment with rare earth business.  

In order to avoid delisting, the company decided to remove less profitable aluminum and aluminum processing business from its listed company. Meanwhile, rare earth companies including China Minmetals Rare Earth will inject rare earth assets with good-performance and great potential into Shanxi Guanlu to turn it into a large rare earth company with advanced technology, big market shares and great competitiveness. By doing so, the company’s asset quality and profitability will improve.