Reuters cited Mr Oleg Deripaska CEO of UC RUSAL as saying that Russia's UC RUSAL could cut output by 6% in the next 18 months. It may be up to 6% which we expect may happen in the next 18 months.
The company which accounts for about 10% of primary global aluminum output said last week that it had no plans to follow US rival Alcoa Inc's lead in cutting production. Aluminum which has a wide range of industrial applications in sectors such as aeronautics and automobile production is a key indicator of global manufacturing demand. Its smelters could continue operations even if prices fall to USD 1,900 per tonne.
According to HSBC, it enjoys a relatively low production cost because it sources 80% of its electricity from hydropower plants in Siberia. Benchmark 3 month aluminum was up 0.3% at USD 2,284 per tonne at 1201 GMT on the London Metal Exchange well above the levels RUSAL said are required to maintain production.
Prices ended last year near 18 month lows on concerns about economic weakness and oversupply, prompting Alcoa to cut output at several European smelters.
Norway's Norsk Hydro and Australia's Tomago Aluminum, partly owned by Rio Tinto have since followed suit but analysts said that much of global production remains in the red.
Mr analyst of HSBC said that "Based on the latest cost curve of Brook Hunt, we calculate that at the spot aluminum price some 40% of global aluminum production is loss making."
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