Rusal to cut aluminum output by 357,000 tonnes in 2013

The board of directors at Russian Aluminum, or Rusal, has approved a change to production volume aimed at cutting costs and boosting margin, that has output this year down by 357,000 tonnes, or 9%, rather than the earlier-planned 300,000 tonnes, the company said.

"The board of the company has approved an additional program of production reductions to improve costs and margins, beyond those previously announced. The updated program will see production halted at a number of the least efficient smelters in the aluminum division West as well as reduced at certain smelters in Siberia. Production is forecast to be reduced by 357 thousand tonnes (or by 9%) in 2013 vs. 2012. Full effect of the program will be reflected in 2014," the company said.

Rusal will announce its long-term strategy for reducing production later, the company said.

Due to the deteriorating economic situation and anticipated growth of losses, Rusal is considering shutting down potrooms at the Volgograd, Ural, Bogoslovsk, Nadvoitsy and Volkhovsk aluminum smelters of its West division in the course of this year, CEO Oleg Deripaska said on Tuesday. Production at these smelters will not resume until the price of aluminum returns to $2,400 per tonne. But Deripaska is not optimistic about the aluminum market and does not expect the price to rebound to this level in the next four years.

A number of the world's aluminum producers have announced the shuttering of capacity. In May, Alcoa, Inc. said it might reduce production capacity 11%, or by 460,000 tonnes a year, and Chalco suspended 9%-10% of overall production capacity for the first time since 2009.

"Despite healthy growth in aluminum consumption, the global aluminum industry is suffering from overcapacity and needs further curtailments to improve the market balance and support producer margins. As of today more than 3 million tonnes of aluminum capacity could potentially be closed by the end of this year," the company said. "At the same time the industry needs further restructuring and reduction in large aluminum stocks to guarantee sustainable development. RUSAL notes the opening of the consultation period on amended LME warehousing regulations and the LME's desire to see waiting time reduce," it said.