RusAl Sees Room for More Cuts as Aluminum Price Struggles

Aluminum giant RusAl could consider deeper capacity cuts if prices for the metal continue to languish around levels last seen in the aftermath of the financial crisis, a senior executive said.

The aluminum industry is struggling with excess capacity, rising costs and weak prices. RusAl estimates a fifth of global production outside China is loss-making, even with demand expected to grow 6 to 7 percent in 2013.

Last year, the company promised to slash 300,000 tons of capacity, a 7 percent drop, and production dropped 4 percent in the first quarter of this year. But rival Alcoa said this month it could shut down as much as another 11 percent of smelting capacity, 460,000 tons, to remain competitive.

"We can (cut more)," deputy chief executive Oleg Mukhamedshin said in an interview.

"There is a decision already, supported by our board of directors, and it is 7 percent from last year's production. If more reduction cuts are needed, we will go back to the board."

He declined to elaborate on whether a price level would trigger a decision, but said sufficient cuts across the beleaguered aluminum industry would help lift prices to $2,000 per ton and above.

Benchmark London Metal Exchange, or LME, aluminum is currently trading at $1,835, around half the value it was in September 2008.