Russia's Rusal may delay aluminium project to help ease oversupply

Russia's Rusal , the world's largest aluminium producer by output, may delay the start of production at one of its biggest projects, seeking to ease a global glut of the metal.

Rusal , led by Russian tycoon Oleg Deripaska, and other big aluminium makers are cutting output in response to record inventories and stubbornly low prices of aluminium, used in vehicles and packaging.

U.S. producer Alcoa Inc, Rusal's main rival, last week suspended production at smelters in Brazil as part of a review of its capacity.

Rusal reported a steeper-than-expected loss for the second quarter earlier on Monday and said it may postpone the start of production at its Boguchansk smelter in Siberia to 2014.

"Very probable that we would not start it this year and postpone it till the next year," first deputy chief executive Vladislav Soloviev told a conference call with analysts.

Rusal said it would cut aluminium output by 357,000 tonnes, or around 8.5 percent of production, more than the 7 percent previously planned, as it seeks to support prices near four-year lows.

"Our industry remains in a crisis of its own making with oversupply leading to excess of stock overhanging the market," Deripaska said in a statement.

Rusal said it plans to produce about 3.8 million tonnes of aluminium this year and about 3.7 million tonnes in 2014, down from 4.2 million tonnes in 2012.

However, attempts by producers to cut global aluminium supply may not be enough as proposed rule changes for industrial metals warehouses and increased scrutiny by regulators could unleash stored aluminium, putting further downward pressure on prices.

The price of aluminium, hit four-year lows below $1,800 a tonne in late June. Prices have since recovered to $1,924 but are still down more than 6 percent for the year.

The company had been expected to post a loss of about $142 million, according to banks and brokerages polled by Reuters.