INTERVIEW-Vimetco says aluminium market in balance

*Aluminium prices seen averaging $1,800 a tonne next year *LME stocks may have peaked *Production costs have fallen By Karen Norton LONDON, Oct 13 (Reuters) - The global aluminium market is in balance and there is no need for more smelter capacity idled during the global economic crisis to restart yet, Dutch-based aluminium producer Vimetco said on Tuesday. "We see things as stable just now, we don't see restarts next year," said Frank Mueller, Vimetco's Chief Executive told Reuters in an interview. "Why? If there are restarts, stocks will increase, prices will go down and production would have to be cut again. We don't see the opportunity just now," he added. At 1700 GMT the London Metal Exchange (LME) three-months price was indicated at $1,900/10 a tonne. Mueller said he expected prices to average $1,800 a tonne over the next year. He said he hoped London Metal Exchange (LME) stocks of aluminium had peaked. "Just now there's a balance between production and consumption." On Tuesday, LME aluminium warehouse inventories stood at 4,558,800 tonnes. Last week, the company said it was restarting Alum, its 600,000 tonnes per year (tpy) alumina refinery in Tulcea, Romania after carrying out an upgrade programme that began in February 2007. [ID:nWLA5254] The move was made purely as part of Vimetco's quest to become a fully integrated aluminium producer and will take bauxite feed from the company's mine in Sierra Leone. But Mueller said there were no plans to restart smelter capacity it mothballed late last year and early this year at its facilities in China and Romania. Vimetco's Alro smelter in Romania is currently operating at about 25 percent below its nameplate capacity of 265,000-277,000 tonnes per year (tpy). The plant is expected to produce 201,000 tonnes of metal this year. In total the company expects to produce around 700,000 tonnes of metal in 2009. The company's 2010 output plan is not yet available. "For us the trigger for restarts would depend on the cost situation. If it makes sense to use high cost electricity and we can be profitable and we don't burn cash then we could start," Mueller said, referring to the Romanian smelter. Restarts in China would depend on Shanghai prices, he added. COSTS DOWN Mueller said the curtailment in Romania had helped reduce Vimetco's production costs. "We see ourselves in the lower quartile for cash costs. Previously, before the 25 percent cutback in Romania, we were around the middle, though always in the lower half." Industry consultants CRU Group estimate average cash production costs were around $1,400 a tonne when last assessed in April. Mueller said he saw moving downstream as a form of diversification. "You can diversify with downstream products...Starting with casting if you're in the club to produce highly sophisticated alloys it's a good club to be in." (Edited by Keiron Henderson)