Alcoa CEO sees positive long-term aluminum prospects

Tag : aluminum

NEW YORK, Oct 7 (Reuters) - The head of aluminum producer Alcoa Inc said on Tuesday that longer-term prospects for pricing and globaldemand are good despite measures to rein in capital expenses andreview underperforming assets to combat softer demand and tightermargins.
'While we face volatile and uncertain markets today, longer- termtrends will drive a rebound in global aluminum demand and theforward market reflects underlying optimism on medium-term aluminumpricing,' said President and Chief Executive Officer KlausKleinfeld.
During a conference call with Wall Street analysts to discusslower-than-expected third-quarter results, he said Alcoa (nyse: AA - news - people ) sees Chinese aluminum demand growing by 15 percent this year,though that rate was down from its previous estimate of 22 percent.
'Brazil and Asia will continue to grow and we project 6 percentglobal growth, which is 2 percentage points below our previousestimate,' he said.
Asked about the outlook for the global aluminum industry, Kleinfeldsaid: 'The credit crunch has forced those seeking liquidity to sellmetal.'
Inventory levels were currently at around 29 days -- relatively lowcompared with the 49 days supply in 2003.
On the supply side, about one-third of capacity is 'under water,'he said, meaning that they were operating at a loss because of highraw material costs and low aluminum prices.
Alcoa, which has already curtailed production at its Rockdale,Texas aluminum smelter, would cut back on capital investmentsduring the current volatile period of global financial turmoil,said Kleinfeld.
'Under the current environment we have curtailed production atRockdale. Curtailing Rockdale was necessary,' he said.
'In the longer term, expectations are positive. We share the viewthat the market prospects are good.
'We should continue to see quite a bit of demand. Our mid- tolong-term prospects for alumina and aluminum are good,' saidKleinfeld.
Aluminum is made from smelting alumina, which is refined frombauxite.
(Reporting by Steve James; Editing by Ben Tan) Keywords:ALCOA/ALUMINUM
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