14 April 2014

The reserves of aluminum LME will decrease

According to the forecasts of specialists of RUSAL, the reserves of aluminum stored in LME warehouses during this year will reach less than 3.74 million tons. The presentation of RUSAL also says that the main reduction of stocks will have to warehouses in Vlissingen (Holland) and Detroit (USA). According to analysts of RUSAL, the significant outflow of metal is largely influenced by the significant increase in rent - starting from 2008-2009, the cost of storing aluminum increased from 32-35 cents / ton to 47-49 cents / ton. Even without taking into account the increase in rent, the cost of storing products in warehouses of the London Stock Exchange exceeds the rent in warehouses that are not owned by it, fivefold. Therefore, it should not be surprising that many financiers prefer to withdraw aluminum from LME storage facilities, which reduces the transparency of the region and is not profitable either for producers or consumers.

According to Steve Hodgson, Marketing and Sales Director of RUSAL, the situation that has arisen with rent is extremely unstable, and the fact that the storage of metal in warehouses of the London Stock Exchange is several times more expensive than in similar warehouses outside the territory of LME, Optimism does not add. This is the problem that the London Metals Exchange needs to be solved. Last year, in the summer, aluminum consumers complained to the LME that the warehouses owned by banks artificially delayed the delivery of products, thereby limiting bids and influencing the subsequent growth of premiums (compared to 2012, their size increased by 30 in the previous year , 3%, reaching the level of 271 USD per tonne).

Alcoa Inc. Meanwhile, like RUSAL, it is reviewing the activities of its own enterprises with the highest production costs, intending to reduce aluminum smelting by 800,000 tons, which is 21% of all capacities. Last year, the company stopped operations in Italy, the United States and Canada, and in February of this year, the production of Point Henry, Australia, whose work record is 50 years, as well as two rolling shops located here, was closed. In Russia, the company owns Alcoa Metallurg Rus and Alcoa SMZ, which belonged to RUSAL before 2005 and acquired from it for USD 257 million.

Such measures are connected with the net loss of the company, which in the first quarter of this year amounted to 178 million USD, while the net profit for the same period last year was 149 million USD.

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