UPDATE 1-Alcoa's Brazil aluminum smelter latest victim of high costs
(Adds analyst comment, aluminum market background throughout)
March 30 (Reuters) - Aluminum maker Alcoa Inc said on Monday it will shut its only remaining smelter in Brazil, the latest victim of a toxic mix of weak metal prices and high energy costs.
Despite tight regional supplies, the plant, with capacity to produce 74,000 tonnes of aluminum per year, is the third to close in Brazil in the past year. That leaves two operating in the country, down from six in 2010.
The closure will cut Brazil's annual production to under 900,000 tonnes even as consumption is expected to grow as South America's largest economy prepares to host the 2016 Olympics.
Last year, Brazil produced 962,000 tonnes of aluminum, the lowest since 1990 and down a quarter from 2013, and well short of its needs for fabricated products, according to data from Brazil's Aluminum Association (ABAL).
High recycling rates will help cushion some of the production losses, driven by soaring energy costs as a severe drought has raised hydropower prices.
"You have a situation in which the massive energy costs mean that primary aluminum is basically untenable," said Nic Brown, head of commodities research at Natixis in London.
Dwindling output could increase Brazil's reliance on imports as its large packaging sector grows, potentially diverting supplies from exporters in Asia and the Middle East away from the North American market.
Brazil imported 306,400 tonnes of primary aluminum and alloys between January and September 2014, up from 78,100 tonnes during the same period in 2013, according to the most recent ABAL data. Continuación...