Rusal America sees strong aluminum demand

By Carole Vaporean

NEW YORK (Reuters) - Despite differing views of U.S. economic growth, Rusal America's president said on Wednesday that demand in all major aluminum segments remains robust and in some cases the third largest aluminum producer's customers have augmented orders for the second half of 2006.

Speaking at the Reuters Global Mining and Steel Summit in New York, Bruce Markowitz, Rusal America Corp. president, also told Reuters that while the parent company has not yet made a final decision and was "looking at many directions and opportunities," it was readying itself for a possible initial public offering (IPO) of equity.

"And it hasn't made a final decision in that respect."

Rusal is privately held but it does produce reports on its performance using U.S. GAAP standards, the executive said.

"And we do share that information with the banking industry that provides financing," he added.

It currently uses its cash resources and debt financing to fund its ambitious expansion program, which aims to nearly double aluminum output by 2013 to 5 million tons per year.

"The company is preparing to meet the requirements of a publicly held company. All of our efforts as far as meeting compliance with regulatory requirements have been progressing each year," said Markowitz.

He said that Rusal is "more open with information and data, and we have more room to go."

Rusal's U.S. business is one of three key export markets for its 2.7 million tons of annual primary output, all of which is produced in Russia and some of which is used domestically.

Markowitz said Rusal's planned volume for the U.S. is about 500,000 tons for 2006.

Currently, about a third of Rusal's export volume goes to the United States, and the company expects to maintain that ratio when the new capacity comes onstream.

Rusal is building Russia's first new aluminum smelter in more than 20 years at Sayanogorsk, where about 300,000 tons of new production should come online later this year.

As it becomes available, the new supply will be allocated approximately in thirds to its already-established markets in the United States, Europe, and Asia.

"Probably in the second half of 2007, new supply will arrive here in the U.S.," said Markowitz.

RUSAL will begin selling the new supply once it comes online, he said, but there is apparent demand for the material even now with RUSAL's order books filled and some customers tapping the spot market to meet their needs.  Continued...