good news for Al abd Orbite LONDON, June 2 (Reuters) - Loss-making Chinese aluminium producers are expected to cut 3.5 million tonnes of production this year, helping to tighten supply and sending premiums for physical metal to fresh record peaks, a Rusal executive said on Monday.
Deputy Chief Executive Oleg Mukhamedshin of the Russian producer forecast in a telephone interview that a shortage of available physical metal would push up premiums to fresh record highs of $500 to $600 a tonne from around $400 currently.
"Taking into account the expected deficit and due to expected production cuts, we think the premium can easily reach new record high well above $500. In the third quarter we can see new records, even $600 would not be out of the question."
Consumers must premiums for immediate delivery of metal, a levy on top of the cash price on the London Metal Exchange .
Capacity cuts in China, the world biggest producer and consumer of aluminium, would be pressured by higher material costs following a ban on unprocessed ore exports by Indonesia and by Chinese banks unhappy with outstanding loans, Mukhamedshin said.
"We expect more production cuts," he said. "The banks are very unhappy with the situation and cannot continue to roll over these bad loans." (Reporting by Eric Onstad, editing by Louise Heavens)
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