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Rusal expects China aluminium demand to improve
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Thursday, 15 Nov 2012

Russia’s United Company RUSAL expected orders to pick up towards the year end due to a rebound in China.

Tepid demand for aluminium in an oversupplied market has weighed on producers including Aluminum Corporation of China Limited. Prices have slumped 10% over the last 12 months and led RUSAL to report its biggest quarterly recurring net loss since its listing in 2010.

The outlook may improve from the final quarter of the year. RUSAL signalled a pick up in China, the world’s biggest consumer of aluminium, citing market speculation that the government will support infrastructure building and start stockpiling as it did in 2008 and 2009.

The company controlled by Russian billionaire Mr Oleg Deripaska said that it was optimistic thanks also to growing North American demand for the metal used in drink cans, aircraft and iPads. This will be largely driven by a Chinese rebound in growth, a resilient USA automotive sector as well as new monetary stimulation steps taken by global central banks to support global economic growth and financial markets.

RUSAL said that China was expected to remain the largest growing market this year at 9% followed by India at 7% and North America at 6%.

China said that it is effectively turning the corner on the economy and likely to meet its growth target for the year as a slowing trend had halted. The market value of RUSAL has declined by about 27% to USD 8.7 billion over the past 12 months.

Despite RUSAL’s market leading position, the weak operating environment has heaped pressure on the company which is embroiled in a shareholder battle over its stake in Russian miner Norilsk Nickel.

For the 3 months ended September, RUSAL posted a recurring net loss of USD 76 million, lagging the average forecast for USD 35 million loss in a Reuters poll of nine analysts. That compares with a recurring net profit of USD 620 million a year earlier.
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