INTERVIEW-Aluminium rolled products demand

* Q3 demand up on H1, but down 10-15 pct year-on-year * Recovery in Europe will not match 2008 levels by 2010 * Companies looking to reduce cash needs, keep stocks low LONDON, Oct 6 (Reuters) - Demand for aluminium rolled products is improving in Europe but third quarter sales were about 10-15 percent lower than in the same period last year, aluminium producer Norsk Hydro said on Tuesday. The Norwegian company said that in the first half, overall sales of rolled products had been down around 25 percent year-on-year in Europe, meaning the industry has partly recovered in the third quarter but not to last year's level. "There is an improvement (in aluminium demand) coming from extremely low levels. Is it restocking or is it real demand? I think it's both. Our customers would only restock if they had better orders," said Oliver Bell, head of rolled products at Norsk Hydro, said in an interview. Bell was speaking about overall market conditions and declined to comment on Norsk Hydro's own sales or other trading figures. The company is the world's third largest supplier of aluminium and aluminium products. Bell said it was too early to say when the recovery in demand would match 2008 levels as nobody yet knew whether the global economic recovery was fully under way. He said most companies remained focused on minimising cash requirements, lowering working capital levels and keeping inventories at the minimum required level. This capital efficiency drive could cap the growth in restocking demand, but Bell said there were limits because companies needed a certain level of inventory to keep production running smoothly. "There's a limit on how low they can go, you need work in progress, you need to not stop your production," he said. On the global economy, Bell said China was recovering maybe even to 2008 levels. "In Europe we don't believe we'll see a full recovery to 2008 levels next year," he said. "About one third of the losses (in Europe's economy) we've seen in 2009 will be recovered in 2010. Of course if the world comes right also Europe will recover faster but it's too early to predict." He noted different sectors have different outlooks: "In consumer goods there will be a recovery but in the auto industry there's lots of incentive schemes which have run out and have not been renewed." This is a risk for aluminium demand, but the lightweight metal is well placed to benefit from trends in emerging markets, building and transportation, and from climate change directives. On the other hand it is beset by record stocks of about 4.6 million tonnes in London Metal Exchange warehouses. On this point, Bell declined to comment save to say a lot of the stock was tied up in financing deals that could limit availability. (Reporting by Maytaal Angel; Editing by Anthony Barker and Keiron Henderson)