Rusal: Output Costs, Demand Will Push Aluminum Prices Higher

MOSCOW (Dow Jones)-Rising production costs and growing global demand are likely to drive aluminum prices higher in the coming months, the world’s largest producer of the metal said Thursday.

Artem Volynets, the strategy director of Russia’s United Co. Rusal, said cold weather in China and power cuts in Africa this year have already crimped supplies, while demand — particularly from China, which alone accounts for a third of overall purchases — remains strong.

Furthermore, he said higher energy costs and the falling dollar are pushing production expenses up at plants outside the U.S., where 80% of global aluminum is produced.

"Breakeven production costs could rise to as much as $3,000 a (metric) ton from around $1,700 at the moment," Volynets told Russia’s RBC TV.

He said Rusal believes the U.S. currency could plummet to $1.80 to the euro, having recently dropped through technical support at $1.50.

Aluminum spot prices currently stand at $3,065 a ton, around 10% below last May’s all-time high of $3,310/ton.