A recent report by Reuters quoted comments from UC Rusal Deputy Chief Executive Oleg Mukhamedshin at London Metal Exchange Week saying the world’s largest producer did not intend to bring any idled production back onstream for the next 3 years and expected its production to remain flat for the period.
Weak prices, even with the hefty physical delivery premium added on top of the LME price, are not enough to encourage Rusal to restart their older, less-efficient potlines. Indeed, they are now so high-cost that they may never be restarted with the company preferring to bring new, more-efficient plants into operation. Mukhamedshin said the company could add 150,000 tons of capacity by the end of next year with a new project. Although the firm has been the most vocal among western producers in recent years, calling for production cuts and indeed has cut production by 12% or 650,000 tons since 2012, it has largely closed older, inefficient potlines and upgraded others to partially replace them.
Rusal is predicting that strong global growth and reduced western supply will push the market into a deficit of 1.4 million tons this year and 1.3 million tons in 2015 followed by 1.1 million tons in 2016.
Yaang Pipe Industry