Aluminium Bahrain BSC the second largest producer of the metal in the Middle East, forecast that prices will recover this year as some suppliers cut output.

Mr Laurent Schmitt CEO in a statement said that “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. That would re balance the demand and supply of aluminum and lead to the recovery of LME prices.”

Aluminum for delivery in three months on the London Metal Exchange, the benchmark price on the world’s largest metals bourse, averaged USD 2,115 a metric tonne in the fourth quarter. The metal traded at USD 1,956 on December 14, a 17 month low and 30% less than the 2011 high of USD 2,803 on May 3.

Alcoa Inc the biggest US producer on January 6 said it will close or curtail 12% of its worldwide smelting capacity of 4.5 million tonne after the price of the lightweight metal slumped amid a global surplus.

Alba doesn’t need to lower output because it has low-cost production, Mr Schmitt said that “Europe will definitely be impacted by the economic situation, but we still foresee steady growth in MENA, Asia and some growth in Americas too.”

The average price of aluminum, which is used in beverage cans, aircraft and window frames, was 11% lower last quarter from a year earlier after global growth decelerated as the sovereign debt crisis gripped Europe and China moved to curb inflation. Supply exceeds demand and inventories have soared, leaving some smelters unprofitable at current metal prices.

Mr Schmitt in the comments said that “Alba has one of the most competitive structures in the world, which enables us to operate in fair, sound economic conditions even with lower LME levels. One of Alba’s objectives is to further increase its production capacity thanks to continuous improvements of our operations’ efficiency.”

(Sourced from Bloomberg)