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. Last Updated: 07/27/2016

Expected Output CutsLift Aluminum Prices

Aluminum prices jumped to their highest levels in six and a half months Thursday on belief that there will soon be deep production cuts, analysts said.


The price climb came after Russian government and industry officials said Wednesday that Russia will decide by Friday -- the deadline set by the European Union -- whether to cut aluminum output as a first step to end a global glut.


The officials said Wednesday that no decision had been made. The government appeared to favor lower production but the industry opposed the move.


"There are more arguments in the government in favor of cutting than arguments against. But industry is not interested in cutting output," Igor Muzychenko, an aide to the director of aluminum producers Aluminy, said.


But a cut in Russian output of 500,000 tons a year was nevertheless "likely to be agreed."


London Metal Exchange, or LME, prices on Thursday rose to $1,255 a ton, up $15 from Wednesday.


"Obviously people are establishing long positions on expectations that there will be some sort of agreement," said Angus MacMillan of LME brokers Billiton-Enthoven Metals, according to Reuters.


Producing countries, met in Brussels last week to try to work out how to cope with a big aluminum surplus which has depressed world prices.


Western producers say strong Russian exports, due in part to low domestic demand, are to blame. Official data show that Russia exported 1.56 million tons of primary aluminum in 1993, up sharply from 964,000 in 1992.


Foreign Trade Ministry official Maxim Medvedkov said domestic consumption was unlikely to fall further.