September 13, 2012 / 11:27 AM / 5 years ago

RUSAL expects shift to "floating" aluminium premiums

MOSCOW, Sept 13 (Reuters) - Russia’s RUSAL, the world’s largest producer of primary aluminium, said it expected a shift in aluminium trade away from fixed cash premiums to a floating premium that would allow producers to lock in their margins.

“We expect to see a tendency to ”float“ premiums and thus fix the margin over casthouse costs,” RUSAL said in a copy of a presentation by Steve Hodgson, RUSAL’s director of international sales, given at Metal Bulletin conference in Moscow.

Hodgson’s presentation said cash premiums over prices on the London Metals Exchange - which he described as the “non-speculative end of our market” - had risen to 10-12 percent of underlying prices, which he said were at their lowest since 2009.

Current LME prices, excluding premium, meant 30 percent of producers were making losses, he said.

“In the short term, further curtailments of unprofitable and inefficient production capacity in all regions will be necessary as the industry looks to create a healthier market structure,” Hodgson’s presentation said.

“In our view this means further capacity closures of unprofitable production which we estimate could lead to a further 800,000 tonnes by year end.” (Reporting by Polina Devitt and Melissa Akin; Editing by Anthony Barker)

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