Aluminum prices to rise as producers cut output, Alba says

Aluminium Bahrain BSC (Alba), the second- largest producer of the metal in the Middle East, forecast that prices will recover this year as some suppliers cut output. “Less-competitive smelters will have to reduce their production capacity or even shut down” in the first half of 2012 because of low aluminum prices, CEO Laurent Schmitt is quoted as saying in a Jan. 9 Bloomberg BusinessWeek report. That would re-balance the demand and supply of aluminum “and lead to the recovery of LME prices,” he said.

Aluminum for delivery in three months on the London Metal Exchange averaged $2,115 a metric ton in the fourth quarter. The metal traded at $1,956 on Dec. 14, a 17-month low and 30 percent less than the 2011 high of $2,803 on May 3, according to the report.

Alba's prediction comes after Alcoa Inc.,the largest U.S. producer of aluminum, said it would slash its global smelting capacity by 12 percent, becoming the first producer to take direct action to cut costs amid a steep drop in metal prices, according to a Jan. 6 Reuters report.The cuts are likely to help raise prices, traders said, in the report.

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