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Aluminum industry: in 2014 the situation is unlikely to change for the better

13 January 2014

According to analysts, the aluminum industry in the new 2014 expect bleak prospects. Difficulties in the industry, which is already sufficiently suffered from both falling prices and overproduction, this is not over. Coming new rules established by the London Metal Exchange, and should be prepared to reduce the premiums, and to competition from China, and are not particularly count on rising prices, any increase in demand.

If you focus on the numbers, it has fallen by more than 13% in 2013. The price of aluminum, in addition, very impressive reserves of this metal is collected in exchange warehouses, forcing manufacturers to reduce not only the production of aluminum, but also close plants for its production.

«Rusal», one of the largest aluminum producers in 2014 is going to an even greater degree to reduce production. In comparison with 2012 the production capacity will be reduced to 15%, which is approximately 650 thousand tons. And that, apparently, is not the limit.

However, these measures, the effect is noticeable at an early stage and, if not taken into account, China is now aluminum deficit of 429 thousand tons. How to believe in the «Rusal», in 2014 the figure could rise to 1.3 million. Accordingly, the growth of the deficit can be expected, and the price increase is projected to «Rusal» value can grow up to 2 thousand. USD per ton.

However, this opinion is not certain, and not all analysts agree with these predictions. So, Oleg Peter and Paul, who is an analyst BCS sure that the possible aluminum shortage in some regions will inevitably be blocked by excess capacity — means first and foremost China. Thus, according to O. Peter and Paul, the value of the metal in 2014 is unlikely to exceed the current figure, which is 1800 USD per ton.

Renaissance Capital analyst Boris Krasnozhenov, implies an increase in the value of up to 1940 USD, which, according to him, it will be possible after the enter into force of the London Stock Exchange rules. In accordance with the aluminum in warehouses should be kept no more than 30 days, that to date, it is currently stored in warehouses until 6m. tons, which is about 10 per cent of the total consumption of the metal a year.

Given that the new regulations threaten to lead to a significant reduction in premiums, «Rusal» has filed a claim against the London Stock Exchange, wanting to cancel the revision of the existing rules.

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