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Russian industrialist says China's supply-side reform supports global commodity prices

Xinhua | Updated: 2017-01-21 10:45

DAVOS - China's current supply-side reform supports global commodity prices, said Vladislav Soloviev, chief executive officer of Russian aluminum producer RUSAL.

"A number of factors bring us to this positive situation," Soloviev said in a recent interview with Xinhua, referring to a significant uplift of aluminum price in 2016.

"First of all, there is a quite strong demand in all markets -- aerospace, automotive -- and we see some recovery of the construction market as well," he said, adding that the expanding demand in the Chinese market was the first factor influencing the price.

The CEO predicted that after years of turmoil, the sluggish commodity prices would be improved thanks to China's supply-side reform.

"China started to implement real supply reforms in 2016 and throughout the year," Soloviev said. "Those bring all of us in the industry to a healthier situation, when we see the new levels of the prices."

RUSAL is a leading global aluminum producer, which operates in 19 countries on five continents.

Among the reform measures that Soloviev praised were capacity reductions in the steel, cement, and aluminum industries. In his view, the reductions led to equilibrium in the market and a better, healthier environmental situation.

Concerning the environment, the CEO said, "it's always the discussion between what we want now and what we want to keep for our children and our grandchildren. But we have to recognize, if you win in the short term, you always lose in the long term."

He praised China's commitment to the Paris Climate Agreement, and said Chinese President Xi Jinping's speech at the World Economic Forum in Davos on Tuesday sent a strong signal on environmental action.

The president's commitment showed that the Paris Agreement has to be implemented not only in words, but in action, he said.

The RUSAL CEO also saw strong opportunities for cooperation between Russian and Chinese companies.

"Russia and China are natural neighbors, and we can do a lot together," Soloviev said.

"Russia can be the natural supplier of some commodities and materials to China, and then China can make the further manufacturing of these materials...," he said, adding "it's a win-win situation for both of us."

He believed countries should give up the complete self-sufficiency in order to cultivate more cross-border partnerships.

However, Soloviev did see certain risks ahead, mentioning Britain's exit out of the Europe Union, the election of Donald Trump in the United States, and environmental issues. However, he said that Russia, China, and their global partners have an opportunity to work to keep economic trends going up.

The RUSAL's helmsman was optimistic about the future with regards to working in the Chinese economy.

"The market is growing, economic reform is happening, there are a lot of infrastructural reforms still continuing on the railways, the roads, in construction," he said.

"That's why we are quite optimistic about the demand of the future, also about joint ventures with Chinese companies," he noted.

On working with Chinese companies, he said he didn't perceive any difficulties.

"Of course if you want to work with Chinese companies you have to be prepared to spend more time, but in the end it gives you more benefits," he said.

Speaking about China's Belt and Road Initiative, he said, "we need all the opportunities we can find, for both countries, both Russia and China, that's why we definitely support this and want to be a part of it."

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