LONDON United Co. Rusal
has revealed a continuing focus on Asian markets at the expense
of European business in its 2012 production report, which will
help maintain the tightness in European markets that has led to
record-high aluminum premiums.
Rusal has all but stopped
offering duty-unpaid material in Europe other than the material
it sells to Glencore International Plc in transactions that
began in 2009, and its analysis of global markets shows that it
does not see European sales as being any more viable in
"While the U.S., China and the
rest of Asia are expected to drive aluminum demand in 2013, our
view on the European consumption of aluminum remains negative,"
Rusal said. "Despite the efforts taken by the (European Central
Bank) to solve the debt problem, European countries are still
suffering from weak economic activity, large budget deficits
and cuts in capital spending which are unlikely to stimulate
economic growth and consumption activity."
In contrast, the company is
forecasting that China will produce 10 percent more light
vehicles this year than in 2012, with strong growth predicted
in India as well. "Emerging economies like China and India
should be the ultimate beneficiaries of aluminum demand from
the car sector, given that the aluminum penetration in those
countries remains well below the levels in North America and
Europe," Rusal said.
The company also sees growth in
Japan, where recent stimulus measures are expected to aid
imports later in the year.
European aluminum premiums
dipped from record highs Feb. 6the first time duty-paid
premiums have fallen since 2011but market participants
expect further increases as warehouse financing deals remain
attractive and will keep material away from the market, forcing
buyers to pay higher numbers for any available metal.
The continuing focus away from
Europe by its largest producer will exacerbate the tightness in
the market, and place further pressure on premiums even if
demand remains at depressed levels.
"The increase in demand and the
tight metal availability continued to push regional premiums to
historical highs in all major regional markets in 2012, and
this trend will possibly continue in 2013," Rusal said.
P1020 aluminum premiums are in a range of 11.3 to 12 cents per
A version of this article was first published by AMM sister
publication Metal Bulletin.