26 JUNE 2012CNBC
Alcoa CEO optimistic about Aluminum Market despite falling price
Edited by : AL CIRCLE
2 min read
Europe is a "big question mark" for commodity markets but at the same time demand for aluminum is strong, Klaus Kleinfeld Alcoa Chairman and Chief Executive Officer, told CNBC on Friday at the Saint Petersburg International Economic Forum.
Aluminum prices have fallen more than $100 to below $1,900 per ton since last month, amid increasing market nervousness about the worsening of the euro zone debt crisis.
"Aerospace demand is very strong, we're seeing an increase in automotive demand," he added.
However, the sharp fall in prices over the spring – aluminum was trading close to $2,300 per ton back in February - has brought trouble to many companies in the industry around the world.
"There are quite a number of players under water," Kleinfeld said, estimating that around one third of the world suppliers of aluminum were under water.
While refraining from forecasting a price for aluminum, the Alcoa CEO said the market was now balanced and pointed out that in times of crisis people want to hold commodities.
In an interview with CNBC on Thursday, Oleg Deripaska, the CEO of Russian aluminum giant Rusal, called on Europe to weaken the euro as the only way out of the debt crisis and said that over the long term he saw consumption of aluminum increasing.
Kleinfeld pointed out that China does not have the resources to be an important competitor on the aluminum production market, as they don't have bauxite or energy reserves and the energy used by Chinese smelters is obtained of coal – more expensive and more polluting – while smelters in other countries use cheaper and cleaner hydropower.
"China does not have the fundamentals to be a competitive force in this [aluminum production] market," he said.
Aluminum prices have fallen more than $100 to below $1,900 per ton since last month, amid increasing market nervousness about the worsening of the euro zone debt crisis.
"Aerospace demand is very strong, we're seeing an increase in automotive demand," he added.
However, the sharp fall in prices over the spring – aluminum was trading close to $2,300 per ton back in February - has brought trouble to many companies in the industry around the world.
"There are quite a number of players under water," Kleinfeld said, estimating that around one third of the world suppliers of aluminum were under water.
While refraining from forecasting a price for aluminum, the Alcoa CEO said the market was now balanced and pointed out that in times of crisis people want to hold commodities.
In an interview with CNBC on Thursday, Oleg Deripaska, the CEO of Russian aluminum giant Rusal, called on Europe to weaken the euro as the only way out of the debt crisis and said that over the long term he saw consumption of aluminum increasing.
Kleinfeld pointed out that China does not have the resources to be an important competitor on the aluminum production market, as they don't have bauxite or energy reserves and the energy used by Chinese smelters is obtained of coal – more expensive and more polluting – while smelters in other countries use cheaper and cleaner hydropower.
"China does not have the fundamentals to be a competitive force in this [aluminum production] market," he said.
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