Russian group UC Rusal reported profit of $1.26bn for the first half of 2010, compared to an $868M loss in H1 2009.

The improved first-half results for the company, which battled a crippling debt load during the financial crisis, reflect the recovery in global demand for aluminium this year, largely driven by strong demand from China.

Rusal said it expects aluminium prices to remain at current levels for the remainder of 2010, helped by a recovery in physical demand in the US, Europe and Japan.

Total aluminium output was 1.99Mt in the first half, a 1% increase from H1 2009. Q2 2010 saw production rise by 5% compared to Q1 2010.

Alumina output was 3.71Mt, down 1% y-o-y, although it increased 3.7% in Q2 compared to Q1.

Rusal chief executive Oleg Deripaska said: “The continued recovery in global markets should generate good opportunities for growth in demand for aluminum, as it is a base metal required to support key industries and growing economies.”

In a statement, it said worldwide production of primary aluminium in the first half of 2010 increased by 5.6% compared to H2 2009 and was 16.5% higher than in the first half of 2009.

Aluminium consumption increased by 7.1% in comparison with the second half of 2009.

As in 2009, the key industries driving the increase in demand were the automotive and construction sectors. The key region for aluminium demand growth is Asia, in particular China, which re-started 1.7Mt of idled capacity during the first half of 2010.

Rusal forecast Chinese production to grow 30% and reach 16.9Mt with consumption growing by 20% to 16.7Mt. It added that China will increase its imports of primary aluminium in 2011 and 2012

It said: “It is estimated that more than 25% of China’s domestic producers are unprofitable at the current aluminium price due to the increase in domestic electricity tariffs, higher raw material costs and wage inflation.

"Curtailment expectations have been further fuelled by Chinese government restrictions on outdated facilities and a strengthening currency, leading to an anticipated reduction in production of 1-1.5Mt on an annualised basis.”