LONDON (Commodity Online): With Alcoa announcing the closure of 531,000 tons of annual production in its quarterly earnings report, Barclays Capital said the rate of aluminum smelter production cuts is picking up.
Alcoa is permanently shutting an idled Tennessee smelter and shutting two of six idled potlines in Texas, among other cuts. Other firms that are cutting smelter output include the a smelter in the Netherlands, owned by Klesch, and Rio Tinto’s Alcan smelter in Lynemouth, U.K. is still at a reduced rate.
Barclays noted the output reduction comes at much higher prices for aluminum than the last time output was curtailed in 2008-09.
“That the cuts have come at a higher price level this time around illustrates the higher cost base from which the aluminum industry is operating and therefore higher cost support level for prices,” they said, noting the last time cuts happened around $1,500 a metric ton and now average costs are around $2,000, around the average London Metal Exchange price.
