Century abandons plan to cut output at Kentucky aluminium smelter

Century Aluminum Co has abandoned plans to slash output at its Sebree, Ky., smelter due in part to a modest rebound in prices, a spokesman said on Thursday, the latest aluminium maker to backtrack on steps to cope with weak market conditions.

The move comes as the company, whose largest shareholder is Glencore Plc, is considering launching a trade case against China, which it blames for the tumbling prices that have prompted smelter cutbacks and closures. It has launched an aggressive pressure campaign with U.S. trade groups, criticizing rising Chinese aluminium exports and overcapacity.

In late October, Century said it would reduce output at the 210,000-tonne-per-year Sebree plant by one-third by December 31 due to a drop in aluminium prices on the London Metal Exchange to more than six-year lows.

It informed employees on Wednesday that it would continue operating the plant at full capacity into the new year, the same day Century made the decision, spokesman Kenny Barkley said.

In a statement released after market close, Century Chief Executive Michael Bless said access to low-cost power due to "cooperation among Kentucky state legislators and regulators, the local utility, and the Company" helped keep the smelter open "despite continued illegal Chinese trade behavior."

Last month, Alcoa dropped plans to close a smelter after receiving government aid.

LME prices have remained stable since late October, trading in a range between $1,432.50 a tonne and $1,528 a tonne.

But the U.S. Midwest premium paid on top of LME prices for physical delivery of the metal rebounded to 8.75 cents a pound due to the swathe of planned U.S. smelter curtailments and closures, after falling to over 3-1/2 year lows last month.

Barkley said the premium's rise "helped to play into the decision" to keep the smelter open. He added that certain "operational changes" had helped cut costs at the plant, though he declined to give specifics or say whether the plant would be profitable.

Access to the low-cost power gives Sebree a "competitive advantage over many of the remaining U.S. smelters," Bless said.

Century will continue to run its Hawesville, Ky., smelter at 40 percent of its 244,000-tonne-per-year capacity. It will close its 224,000-tonne-per-year Mount Holly, S.C., facility at the end of the year unless a deal with the state power company is reached.