* To cut 147,000 metric tons of capacity at Brazil smelters
* Aluminum prices rise 1.5 pct to $1,763.25/ton on LME
March 28 Alcoa Inc, the biggest U.S.
aluminum producer, said it would cut 147,000 metric tons of
capacity at two smelters in Brazil to stem a growing global
surplus that has depressed prices and made a large number of
Benchmark aluminum prices rose about 1.5 percent to
a session-high of $1,763.25 per ton on the London Metal Exchange
on Friday, after Alcoa's announcement.
Since October, prices have remained under $1,800, close to
or below the cost of production at a large number of plants.
Many companies, including the world's biggest aluminum
producer Rusal and rival Rio Tinto Ltd, have
shut plants, but big smelters in China, the world's largest
producer, show no sign of cutting output.
China accounts for about 30 million of the world's 50
million tonne annual output.
"Aluminum prices can only go up if we see cuts in production
and capacity on a large scale," said Daniel Briesemann, an
analyst at Commerzbank.
"As long as some cuts are being outweighed by opening of new
capacities in places such as the Middle East and other countries
where power is cheap, then that doesn't make a difference to the
entire market," he said.
The price of aluminum - used in the aerospace, construction
and automotive sectors - has fallen about 37 percent since May
2011, when it touched a high of $2,800 per tonne.
Alcoa expects to cut its smelting capacity by about 800,000
metric tons, or 21 percent, once it completes all announced
curtailments and closures, including those at Sao Luis and Pocos
de Caldas smelters in Brazil.
Alcoa said last month it would close its 50-year-old Point
Henry smelter and two rolling mills in Australia.
While the company has been the most aggressive in cutting
older capacity that is less efficient, it is also focusing on
commissioning its massive new Ma'aden smelter in Saudi Arabia.
The smelter will have a capacity of 740,000 tonnes per year
and will be one of the lowest-cost plants in the world.
The company said capacity cuts in Brazil, where power costs
have gone up, are expected to be complete by the end of May.
Alcoa said it expected to take after-tax restructuring
charges of $40 million to $50 million, or 4-5 cents per share,
in the first quarter ending March 31 due to the capacity cuts.
The company's shares were little changed at $12.54 in early
trading on the New York Stock Exchange.
(Reporting by Swetha Gopinath, Harpreet Bhal and Josephine
Mason; Editing by Kirti Pandey and Don Sebastian)