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. Last Updated: 07/27/2016

Russia Says Aluminum Output Cut

LONDON -- Aluminum prices jumped this week after a senior Russian official insisted his country was honoring a global agreement to cut production.

There has been increasing worry that Russia would not meet its pledge to reduce annual output, initially by 300,000 tons."More than a third of this amount (300,000 tons) has already been stopped ... since the time of the announcement of the government decision" on Jan. 29, Vladimir Kalchenko, first deputy director of the Russian producer group Aluminiy, said in an interview.

The full 300,000 ton reduction would be in force by the end of April, said Kalchenko, who is in London for talks with the International Primary Aluminum Institute, or IPAI, later in the week. His comments reversed the market's morning bearishness and helped the price jump $10 to $1,248 per ton Tuesday.

Late last month a number of Western producers and Russia agreed to the cutbacks to help reduce huge stocks -- equivalent to nearly six months' demand -- hanging over the market.

Russia, whose smelters lost much of their domestic market with the collapse of the Soviet Union and so turned to exports, agreed the cuts on condition that the West help it update its aluminum industry.

There have been doubts whether Moscow would be able to force all its smelters to trim production and Valchenko admitted that they would be painful. But he said they would be carried through."This decision, as in other civilized countries, was taken after appropriate discussions with the producers," he added.

Kalchenko said Russia would be able to meet the full amount provided the West did so too.

The full Russian cuts "will depend on the development of the market situation and the implementation of the agreement by others," he said.

"If we don't get any confirmation that the Western counterparts have already started cutting back then we will be forced to suspend our cuts.

"Our goal in coming here is to meet the management of the IPAI to find some mechanism which could supervise the realization of this agreement," he added. Kalchenko said the cuts would mean an equivalent drop in Russian exports this year.

"For now, except promises, there is nothing more substantial. Therefore I can't say we're satisfied," Kalchenko said.