Mytilineos says commodity super-cycle still on

ATHENS, Dec 2 (Reuters) - Growth in China and other emerging economies may lead to commodity shortages in the coming years, said Evangelos Mytilineos, chief executive of southeast Europe’s biggest aluminium smelter.

"The super-cycle is still in place. The Chinese economy, the locomotive of the world commodities boom, is still in place," said Mytilineos, CEO of Mytilineos Group MYTr.AT, which owns aluminium and alumina producer Aluminium of Greece.

“Going forward, I think there will be a substantial shortage in commodities from emerging markets demand,” he added.

The gap between supply and demand in the aluminium market will gradually narrow in 2011 and disappear in 2012, Mytilineos estimated.

“Sometime in 2013 we will definitely move into a deficit. After 2014 it seems likely we will get into dangerous territory in terms of a risk of shortages,” he added.

In the aluminium market, Mytilineos estimated that there were at least as much in unregistered stocks as registered ones. “Total aluminium stocks at the moment must be around 8.5 to 9 million tons,” he said.

“We also have to take into account that by far the majority of the stocks, close to 80 or 90 percent, are tied up in warehousing and financing deals,” he said.

Recent moves by Rio Tinto RIO.AXRIO.L, the world's biggest aluminium producer, to price more of its alumina on a short-term basis have started a debate across the industry, Mytilineos said. [ID:nSGE6A01G]

“A very serious discussion has commenced in the metals industry about that,” he said. “I don’t know what the outcome will be.”

But Mytilineos has not considered changing its $2 bln deal to sell alumina to Glencore [GLEN.UL], the world’s biggest commodity trader, under a 10-year agreement that started this year. It calls for Mytilineos to sell more than 5 million tonnes of the commodity to Glencore at an agreed, LME-linked price.

“We have not initiated any discussion with Glencore about changing the terms,” Mytilineos said. “We want to see how the market develops and then see if we are going to make any changes or not. We have a very good partnership with Glencore.”

Under a separate deal, Glencore provides Mytilineos with about a fifth of the bauxite it uses to produce alumina. Mytilineos itself mines about half of the bauxite it uses as a raw material to produce alumina.

Aluminium of Greece has an annual production capacity of about 800,000 tons of alumina, 165,000 tons of primary-cast aluminium-electrolysis and 170,000 tons of end-products aluminium.

Mytilineos said the company so far had no plans to resume the operations it cut last year at its Romanian unit, Sometra. “At the moment, we have no plans to restart the operation,” he said.

The CEO also said on Thursday that the Greek metals and energy group expected double-digit sales growth this year and next due to booming business abroad. [ID:nLDE6B1013]

Reporting by Harry Papachristou; editing by Jane Baird