Russia Power Cut Could Push LME Aluminum To $3,000/Ton -Harbor

SYDNEY, Aug 17, 2009 (Dow Jones Commodities News via Comtex) -- A major incident at Russia's largest hydropower station that serves four aluminum smelters is highly likely to "considerably" impact output and potentially drive prices to up to $3,000 a metric ton, Harbor Intelligence said Tuesday. State-owned RusHydro's (HYDR.RS) Sayano-Shushenskaya electricity plant stopped producing Monday when a turbine room flooded, killing at least 11 people with 32 reported missing. Repairs are set to take years. It's "highly likely UC Rusal output will be impacted considerably," said Harbor, with Rusal's Sayanogorsk and Khakas smelters that have a combined capacity of 837,000 metric tons as well as two other smelters forced to switch to alternative sources of power. "Those temporal energy supplies are estimated to last weeks if not days given that energy demand rises considerably as we approach autumn-winter," said Harbor, noting that Russia's government has said consumer demand will be prioritized over industrial demand. Rusal said it could experience a loss of at least 500,000 tons of output once temporary energy supplies are cut, or 13% of the company's 2009 forecast. "This is a potential super bull factor for aluminum as we approach the fourth quarter given that global demand is in growing mode since last December," Harbor said. The market has been experiencing a deficit since June, it added, with 70% of LME inventories of 4.55 million tons not available as they are tied up in financing deals, and global visible inventories in terms of weeks of consumption peaking and trending down. The potential cut in Russian output could trigger a run higher to technical targets towards $2,700-$3,000/ton, Harbor said. At 0021 GMT, London Metals Exchange aluminum traded at $2,009/ton, up $49 on the Monday afternoon kerb, or up 2.5%. -By Elisabeth Behrmann, Dow Jones Newswires; 61-2-8272-4689 elisabeth.behrmann@dowjones.com