UC Rusal comments on LME official stock decline below 4 Mln tonnes

UC RUSAL, a leading global aluminium producer, notes that official LME aluminium stocks fell below 4 million tonnes on 11 February for the first time since May 2009.

RUSAL notes that LME aluminium stocks keep declining and maintain a steady decrease of around 7 thousand tonnes per day. This drawdown reflects the Company’s view of the supply and demand balance on the global market excluding China which is currently in deficit. The fundamental demand for aluminium remains strong and RUSAL expects to see the stocks at LME warehouses to continue to decrease throughout 2015.

Premiums fill in the gap between the LME pricing mechanism and physical market. RUSAL’s expectation is that stocks (reported/unreported) are being delivered to the consumer market to address the supply deficit so up until today, there has been no significant downward pressure on premiums with the US and Asia still reporting premiums at record levels.

The Company forecasts that demand for aluminium will continue to grow despite concerns related to the Chinese slowdown. In RUSAL’s view, aluminum is less sensitive to the Chinese slowdown, in particular, due to big infrastructural spending. Outside China, the EU QE program should support the European economy in the second half of 2015. Cheaper oil is also likely to further promote consumption growth in G7 countries, India and China.