Siberia dam accident could aid aluminum industry

NEW YORK, Aug 18 (Reuters) - A potential drop in Russian aluminum production following a fatal accident at a Siberian hydroelectric plant, should help the global industry by reducing already high inventories, analysts said on Tuesday. "Any loss of capacity is good," said Charles Bradford of Affiliated Research Group. "Less supply is good, as there is too much inventory." The aluminum price rose 4 percent on Tuesday after Russia's RUSAL said it could lose at least 500,000 tonnes of production after the accident at the Sayano-Shushenskaya power station. RUSAL, the world's largest producer of the metal, is talking with government officials about the possibility of cutting output after the fatal accident, although no decision has yet been taken, the company said. Commerzbank said in a note to investors that repair work at the plant could last up to four years. "Taking this into consideration, the extent of the repercussions on the aluminum market becomes evident. "However, the production problems in Russia will only reduce the production surpluses," it said. Shares in Alcoa Inc, the biggest U.S. aluminum company, rose 3.4 percent to $12.84 on the New York Stock Exchange in afternoon trading, while on the Nasdaq, Century Aluminum rose 5.1 percent to $11.29 and Kaiser Aluminum was up 1.48 percent at $32.13. Alcoa spokesman Kevin Lowery said the Pittsburgh-based company was not directly affected by the accident as it has only fabrication plants in Russia and no smelting operations, which require large amounts of electricity. But Bradford said the possibility of half a million tonnes less aluminum hitting the market could benefit the industry which has been struggling with lower demand and high inventories this year. Aluminum inventories are at record highs of 4.57 million tonnes. But most of the metal being tied up in deals to release cash for producers could propel prices to new highs, some analysts say. Since last year's economic downturn, the price of aluminum dropped more than half from a high of over $3,000 per tonne. It has recovered some 30 percent this year to around $2,000. (Reporting by Steve James; editing by Gunna Dickson)