Rusal Expects Global Demand to Slow in 2012 on Europe Crisis

United Co. Rusal (486), the world’s largest aluminum producer, expects global demand growth for the metal will slow this year as consumption in Europe remains flat, prompting producers to idle capacity.

Global aluminum demand may gain 7 percent to 48.2 million metric tons this year, down from last year’s increase of 10 percent to 45.1 million metric tons, Rusal said today in a statement to the Hong Kong stock exchange.

Aluminum, used in cars, packaging and houses, has declined 10 percent in the past year, hurting producers such as Rusal and Alcoa Inc., which last month booked its first loss in two years. Global capacity may be curbed by between 6 and 8 percent in the first half of this year, Rusal said today.

“2012 is forecast to be a very challenging year for Europe,” the Moscow-based company said today. Customer destocking from last year may now have stopped, it said.

Rusal shares fell 1.1 percent to HK$6.56 in Hong Kong as of 10:00 a.m. local time compared to a 0.1 percent gain in the benchmark Hang Seng index.

Rusal may reduce its output by 6 percent in the next 18 months, it said today, reiterating comments by Chief Executive Officer Oleg Deripaska last month. Alcoa said last month it would cut 12 percent of capacity and Rio Tinto Group (RIO) last week took an $8.9 billion one-time charge on the value of its aluminum business.

“About 31 percent of China’s aluminum production capacity may be unprofitable now,” Rusal said. That is equivalent to about 5.9 million tons a year, it said.

Still, the company sees a “potential recovery coming in the second quarter of 2012” as demand will grow 11 percent in China and 10 percent in India this year, it said.

Rusal’s aluminum output last year increased 1 percent to 4.1 million tons compared with the year earlier, it said today. Production in the fourth quarter rose 1 percent on year to 1.06 million tons, it said.