19 OCTOBER 2013The Wall Street Journal
Rusal Plans to continue aluminum output cuts in 2014
Edited by : AL CIRCLE
2 min read
The world's largest aluminum producer, United Co. Rusal PLC, said Thursday that it plans to continue its steep production cuts in 2014 as global markets remain heavily oversupplied.
The company said it expects to reduce output by 647,504 tons next year as it continues to feel the impact of the full drop in output from several facilities that were mothballed part way through this year.
The cuts would come on top of an output decline of 324,700 tons this year as the company has called for an industry-wide reduction in production as massive global oversupply has knocked the bottom out from prices.
"Rusal continues to react to the current market conditions and may consider further actions to improve its cost position in the industry," said the company's first deputy chief executive, Vladislav Soloviev.
In March, Rusal said it planned to cut output in 2013 by 300,000 tons, or 7% of its 2012 production, due to weakening market conditions. In August, it upped its reduction target for the year to 357,000 tons. The end figure will come in slightly below the target due to technical issues related to slowing production and delays in getting government approval for shutting down plants, a spokeswoman said.
In August the company decided to permanently close one smelter and put another four temporarily on hold. Production had already been halted at four other facilities earlier this year and a further four had their output reduced.
The company said Thursday it has also decided to delay the start of commissioning the Boguchansky smelter until mid-2014.
Rusal has said prices would have to rise to around $2,400 a ton in order to restart some of its closed capacity. On Thursday, LME 3-month aluminum traded around $1,787 a ton--down 13% since the beginning of the year.
With vast inventories and uncertain demand, prices are dropping and the industry is being forced to focus on cost control and margin improvement.
In May, U.S. aluminum giant Alcoa Inc. said it would consider cutting 11% of its smelting capacity. Mining titan Glencore Xstrata also said it would slash spending and shelve projects in a bid to support prices and remain profitable.
The company said it expects to reduce output by 647,504 tons next year as it continues to feel the impact of the full drop in output from several facilities that were mothballed part way through this year.
The cuts would come on top of an output decline of 324,700 tons this year as the company has called for an industry-wide reduction in production as massive global oversupply has knocked the bottom out from prices.
"Rusal continues to react to the current market conditions and may consider further actions to improve its cost position in the industry," said the company's first deputy chief executive, Vladislav Soloviev.
In March, Rusal said it planned to cut output in 2013 by 300,000 tons, or 7% of its 2012 production, due to weakening market conditions. In August, it upped its reduction target for the year to 357,000 tons. The end figure will come in slightly below the target due to technical issues related to slowing production and delays in getting government approval for shutting down plants, a spokeswoman said.
In August the company decided to permanently close one smelter and put another four temporarily on hold. Production had already been halted at four other facilities earlier this year and a further four had their output reduced.
The company said Thursday it has also decided to delay the start of commissioning the Boguchansky smelter until mid-2014.
Rusal has said prices would have to rise to around $2,400 a ton in order to restart some of its closed capacity. On Thursday, LME 3-month aluminum traded around $1,787 a ton--down 13% since the beginning of the year.
With vast inventories and uncertain demand, prices are dropping and the industry is being forced to focus on cost control and margin improvement.
In May, U.S. aluminum giant Alcoa Inc. said it would consider cutting 11% of its smelting capacity. Mining titan Glencore Xstrata also said it would slash spending and shelve projects in a bid to support prices and remain profitable.
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