Rusal expects 1.3 mln T global aluminium deficit in 2015

Russia's United Company Rusal forecasts a global aluminium deficit of 1.3 million tonnes in 2015, which will keep the spot price premium for the metal high, an executive at the world's biggest producer of the metal said on Tuesday.

Despite this, more than half of the production capacity which is currently mothballed globally after years of falling prices will not be restarted, Rusal First Deputy Chief Executive Vladislav Soloviev said.

Many aluminium producers have cut loss-making capacity or shut down completely as they struggled with rising costs, falling prices and a flood of new Chinese capacity in the past few years.

The aluminium smelting process is continuous and smelters cannot easily be stopped and restarted. If production is interrupted the metal in the pots solidifies, often requiring an expensive rebuilding.

The aluminium market is seen tightening significantly in 2015, according to a recent Reuters poll.

Premiums - a levy on top of the cash price on the London Metal Exchange to take physical delivery of metal - in Europe surged in September to record highs of $460-$480 a tonne for duty-paid material in Rotterdam.

In the United States, premiums are at a record high of 21 cents per lb and in Japan, aluminium buyers will pay record premiums of $420 per tonne over LME pricing for October-December shipments.

"I don't think premiums will go down," Soloviev told an industry event in Abu Dhabi, the capital of the United Arab Emirates.

"My projection is that by the end of the year we will have a 1.5 million tonne deficit and, next year, we will have maybe a 1.2 million to 1.3 million tonnes deficit."

The level of aluminium warehouse stocks would also fall, hitting 4.2 million tonnes by the end of 2014, down from 5.5 million tonnes at the end of last year, Soloviev said.

But even with underlying factors for aluminium prices being buoyant, Soloviev did not believe all the spare capacity around the world would be reactivated.

"Only 40 percent could be restarted...it takes a lot of effort and time," he said.