Alcoa CEO sees aluminum demand doubling

Reuters reported that aluminum prices are expected to keep climbing and demand for the metal will likely double in the next decade.

Mr Klaus Kleinfeld CEO of Alcoa Inc said that although aluminum markets are tight with demand outpacing supply, Alcoa has no intention of restarting additional US smelters soon. The general trend is clearly up for the simple reason that demand is up we are aluminizing the world. Last week, Russia's UC RUSAL expected metal prices to recover from their recent fall thanks to strong demand from China.

Mr Kleinfeld declined to predict the metal's price but pointed to the fact it has risen from around USD 1,100 per tonne in January 2009 to USD 2,500 to USD 2,600. He considered that price range was fair for aluminum in the current market.

Goldman Sachs raised its three month price forecast for aluminum to USD 2,700 per tonne from USD 2,200 partly due to improvement in Western manufacturing activity in the six months ended March.

Mr Kleinfeld said that Alcoa still expects global aluminum demand to grow by 12% this year and to double in the next 10 years as customers like auto and plane manufacturers use more of the lighter weight metal for their products. He said that demand is holding up in all end markets with the exception of building and construction in the US and Europe. He sees slow activity in both residential and commercial building industries; Alcoa competes mostly in the commercial field.

Mr Kleinfeld declined to hint at how the Q2 was shaping up but noted Q1 results showed 20% bottom line growth. While asking whether the company was going to bring back more US smelter capacity idled since the recession, he noted Alcoa recently restarted one smelter in New York and two in Washington State.

He said that other than that we have no intention of US restarts any time soon. The three started since March resulted from the company reaching favorable agreements with local power companies. We are watching the market.