The company, a unit of India’s HindalCo Industries Ltd
, said it was able to push through unexpected headwinds
in the second half of fiscal 2013, which ended March 31, and
will continue to move ahead with numerous expansion projects.

“As expected, we saw a sequential recovery from our
seasonally low third quarter … driven by strong demand, good
cost control and higher operating efficiencies,” Chief Executive
Phil Martens said in a statement.

Net income attributable to common shareholders was $59
million in the fiscal fourth quarter ended March 31, compared
with a loss of $107 million a year earlier. Adjusted to remove
one-time items, earnings for the quarter were $80 million, a $55
million increase over the previous year.

Revenue eased to $2.5 billion from $2.6 billion in the 2012
period.

Novelis saw solid demand in its key end markets globally and
was able to better manage costs, partly due to increased use of
scrap metal, Martens told Reuters in an interview.

For fiscal 2013, Novelis raised the average recycled
aluminum content across its product offering by 4 percentage
points to 43 percent, ending the year at 45 percent scrap.

Though he attributed the improved results to a combination
of factors, Martens said, “Certainly our increase of recycled
content has helped us. We saw a meaningful benefit from scrap,
driven by better spreads and higher consumption in most of our
regions.”

The aluminum company’s changing product mix, reducing those
product offerings that require all-prime metal content, has
helped it operate more efficiently and to lower costs.

“When we look at it strategically, it’s doing exactly what
we had hoped. It’s providing us with a natural hedge against the
LME (aluminum price). But it is also driving our business in a
more cost-effective manner,” Martens said.

Novelis has a goal of making products with an average of 80
percent recycled material by 2020. Once its new recycling
capacity comes on line by the end of fiscal 2014, it will be
able to increase the scrap content to the low 50 percent range.

For fiscal 2013, Novelis’ shipments of aluminum rolled
products slipped to 2,786 kilo tonnes from 2,838 kilo tonnes for
the fiscal 2012 period, due mostly to the sale of its three foil
plants in Europe and production disruptions in North America.

Martens said Novelis’ capacity is currently fully booked,
and he expects global demand to grow for the rest of the decade.

He looks for the flat-rolled products market to see demand
grow by 32 percent globally over the next five years, with China
still the strongest growth area. But he also looks for
“meaningful growth in every region in the world driven by
substitution, urbanization and sustainability.”

The automotive segment will turn in “explosive growth,” and
Novelis plans to expand capacity to meet demand for auto sheet,
a segment Martens projects to grow 25 percent globally on a
compound annual basis.

Novelis’ specialty aluminum business of electronics,
architecture and transportation is seen growing globally at a 6
percent annual compound annual rate.

Cans should show solid demand growth of 4 to 5 percent
globally compounded annually, from substitution in Europe and
increased consumption in Asia and South America, he said.

To meet growing demand, Novelis allotted another $700
million to $750 million to add rolling capacity, finishing
facilities and recycling plants in fiscal 2014. In fiscal 2013,
its record capital investment came to $775 million.

But extreme weather conditions, either too much or too
little rainfall depending on the region, has resulted in a wide
range of estimates. So some players decided to pull back their
positions ahead of the report, after a recent run up in prices.

“(The selling was) a little bit of position squaring. With
the USDA report coming on Friday, I think the buyers are going
to be a bit timid at these levels and the market may be able to
pull back marginally,” said Sterling Smith, futures specialist
at Citigroup in Chicago.

Most-active July cotton on ICE Futures U.S. settled
0.24 cent lower at 87.15 cents per lb. Volume was 13,808 lots.

Cotton prices had gained for each of the three previous
sessions, as investors bet unfavorable weather, with either too
much or too little rain, in top growing states in the United
States would compromise the current crop.

“Without question, this is one of the crop years when
weather trumps all concerns with pending production,” said
Sharon Johnson, cotton specialist for Knight Futures in Georgia.

The U.S. Department of Agriculture’s (USDA) monthly crop
report on Friday will be watched for any changes in the supply
and demand forecasts that reflect erratic weather conditions.

Dealers also said Tuesday’s selling was due in part to the
expiration of May cotton futures on Wednesday. Some players saw
the higher prices in July futures as carrying too large of a
premium over the May contracts, selling July and buying May
futures to bring their prices more in line with each other.

“May expires tomorrow and July was carrying a pretty big
premium. So it backed off a bit from that,” said Keith Brown of
cotton broker Keith Brown and Associates in Georgia.

He added that it still carried a healthy premium of about
115 points over May futures.

“But that’s nothing that the market can’t handle. You could
continue to see July back off until it equals the 86 (cent per
lb) area where May finished,” Brown said.

July had sold off considerably earlier in the session, which
Brown said reflected cotton’s poor planting conditions.

He and others said the crop would eventually get in the
ground, but could continue to see weather related delays.

Analysts have offered a wide range or estimates for the
2013/2014 crop with projections running as low as 14 million up
to around 18.45 million bales compared with current USDA
estimates of 20.65 million bales for the 2012/2013 crop year.

The 2011/2012 crop came in at 18.19 million bales.

“I think we’ve had enough improvement in the weather that we
could be looking at some better yields. With the run up we’ve
had in cotton prices of late, coupled with some weakness in corn
and soybeans, I think we might be able to sneak a few extra
cotton acres in,” said Smith, who projects a 17.67 million bale
crop for the coming season.

Friday’s USDA report will also be the first estimates for
the corn, wheat and soybean crops, which have also been impeded
by drastic weather conditions that could cause some farmers to
switch acres to cotton from other crops.

Cotton traders’ concerns run from drought conditions in
Texas, the country’s top growing region, to too much rain
delaying cotton planting in the Southeast.

(Reporting by Carole Vaporean; Editing by Tim Dobbyn)

At the mid session, gold, along with markets in stocks,
bonds, oil and other commodities, was roiled briefly by a bogus
report of explosions at the White House. Gold pulled up off its
lows on the fake report.

The early decline retraced some of gold’s 1.6 percent rally
from a day earlier, which was spurred by strong physical
purchases.

Traders said gold prices fell to session lows in overnight
dealings when the dollar firmed in reaction to weaker April
manufacturing data from both China and Germany, and then
lingered at the lower levels.

“I think the whole commodities space came off because of the
weak PMI out of China and the weak PMI out of Europe, especially
Germany,” said Heraeus Precious Metals Management metals trader
David Lee. “That combination is dragging everything from copper
to silver to platinum and palladium down. And gold is going down
in sympathy because it’s part of the basket.”

Gold fell 1.4 percent to a session low of $1,405.44
an ounce and had pared losses to $1,412.70 by 3:14 EDT (1914
GMT), off 0.87 percent. Gold has fallen 15 percent this year.

U.S. gold futures for June delivery were down 0.61
percent at $1,412.30 an ounce.

Shortly after 1 p.m. (1700 GMT), gold prices pulled up off
their lows, U.S. government debt prices surged briefly, and
stocks fell sharply after a false tweet from the Associated
Press said there had been two explosions at the White House and
that President Barack Obama had been injured.

An Associated Press spokesman told Reuters that the Twitter
message reporting two explosions in the White House was “bogus”.
The White House said Obama was fine.

The precious metal’s retreat off the one-week high it
reached a day earlier reflected investor nervousness about
holding on to gold positions for long, traders said. Many gold
bulls were caught by surprise a week ago when gold slid to its
biggest-ever daily loss in dollar terms.

The metal was also under pressure from a strong dollar and
rebounding equity markets after sales of new U.S. single-family
homes rose in March, indicating the housing market recovery
remains on track.

In other markets, copper fell to an 18-month low and crude
oil was down nearly 1 percent as data revealed a slowdown in
business activity in Germany and China in April. The figures
heightened concerns over global growth.

“Gold is lower as well as other commodities, including crude
oil and base metals, which fell after weaker-than-expected
economic data out of China and Europe, which gave a boost to the
dollar,” Commerzbank analyst Carsten Fritsch said.

Traders were also pointing at pressure from a shift in asset
allocation, while Goldman Sachs said it expected further
declines in gold prices on continued ETF outflows as conviction
in holding gold continues to wane.

“What we saw in the past few sessions was a lot of physical
buying in the form of coins and bars but the ETF numbers are
heavily down and we don’t necessarily see a resurgence in demand
from the ETF side any time soon,” SP Angel analyst Carole
Ferguson said.

SPDR HOLDINGS AT 3-1/2 YEAR LOW

Holdings of SPDR Gold Trust, the world’s largest
gold-backed exchange-traded fund, tumbled 1.6 percent to the
lowest level since November 2009 at 35.51 million ounces. That
followed daily falls of less than 1 percent in the past week.

While some physical buyers have been seeking bargains at
gold’s lower prices, investors are cutting exposure due to
worries about central bank gold sales and prospects of an end to
inflationary monetary policy.

Physical buying persisted in Asia even though spot gold has
rebounded more than $100 from last week’s lows of $1,321.35.
Premiums for gold bars were at multi-month highs in Singapore
and Hong Kong as supply tightened for coins and other products.

Among other precious metals, silver was down 1.84
percent at $22.95 an ounce, platinum lost 1.09 percent to
$1,412.99 an ounce, and palladium fell 1.44 percent to
$670.72 an ounce.

At the same time, investors reduced bullion holdings in the
top exchange-traded fund to the lowest level in nearly three
years.

The near-term technical outlook remains positive for gold,
which is down more than 15 percent this year. Longer term,
however, it may resume its downtrend despite the physical buying
in Asia and elsewhere.

At one point, spot gold was up 2.48 percent at a
session-high of $1,438.66 per ounce. That was more than $100
higher than the two-year low of $1,321 last Tuesday. In later
trading bullion fetched $1,424.30 per ounce, up 1.47 percent
from late Friday.

U.S. gold futures hit an intraday high of $1,438.80 an ounce
on Monday from the previous close of $1,395.60. COMEX gold for
June delivery finished at $1,421.20, up 1.8 percent, then
rallied to $1,426.70 in after-hours trade.

“The continued technical bounce off the recent lows is being
prompted by the bargain hunting and strong physical demand that
we’ve seen in the market from this recent sell off,” said David
Meger, vice president and director of metals trading, at Vision
Financial Markets in Chicago, Illinois.

Gold posted its biggest-ever daily loss in dollar terms last
Monday, shocking investors who have used gold as protection
against inflation and other market risks.

“Physical demand is giving the price a psychological boost,
but don’t think that could make up for the 65-tonne outflows
from ETFs last week,” Saxo Bank senior manager Ole Hansen said.

The U.S. Mint reported sales of gold coins to the public of
167,500 ounces so far in April, the highest level since May
2010, Barclays said in a note to clients.

“The market is vulnerable to intense short covering …
while many physical players see these prices as very attractive
indeed and will chase price dips,” VTB analyst Andrey
Kryuchenkov said.

“However, we still believe the market went through a
fundamental shift and that a sustained rebound …is very
unlikely.”

Gold prices thrive in a high-inflation, low-interest rate
environment, because this reduces the opportunity cost of
holding a metal that pays no yield.

It had rallied to an 11-month high in October last year
after the Fed announced its third round of aggressive economic
stimulus, raising fears the move would stoke inflation.

ETF OUTFLOWS

Outflows from exchange-traded funds could indicate that
investors are parking their money in assets other than gold, but
last week’s trading data from the United States also showed that
funds had injected new money into gold futures.

Holdings of the largest gold-backed exchange-traded-fund,
New York’s SPDR Gold Trust , dropped 0.88
percent on Friday to their lowest level since March 2010.

Hedge funds and money managers raised their net longs in
gold futures and options in the week to April 16, a report by
Commodity Futures Trading Commission showed on Friday, as new
money entered the market at lower prices.

Other precious metals benefited from gold’s gains, with
silver up 0.86 percent at $23.37 an ounce and palladium
1.26 percent higher at $680.50. Platinum rose 0.65
percent at $1,431.24 an ounce.

As economic readings continue to improve, investors have
been reassessing their need to seek the additional returns
provided by alternative investments like commodities.

As a result, some markets like COMEX silver, down 0.3
percent, and sugar, off 0.4 percent, got sold after gaining in
recent sessions.

The Thomson Reuters-Jefferies CRB index, the
commodities bellwether that tracks 19 markets, was down 0.29
percent with losers and gainers almost evenly spit.

The unexpectedly large decline in the number of people
filing new unemployment claims in the United States last week,
helped boost equity markets and drew some money away from
commodity markets.

The drop in initial jobless filings could ease fears of a
deterioration in labor market conditions after a surprise
stumble in job growth in March. Claims are now back at the lower
end of their range for this year.

“This data is especially welcome on the heels of last week’s
jobs report, and it just adds to the tremendous demand that
there continues to be for equities,” said Leo Grohowski, chief
investment officer at BNY Mellon Wealth Management in New York.

Earlier this week, minutes from the Federal Reserve’s last
meeting showed that a few policymakers were looking to end some
stimulus measures by the end of the year provided the U.S. labor
market and growth prospects continue to improve.

“Regardless of Fed policy, there are many more attractive
assets to profit on than gold right now. It looks like the trade
right now is buy S&P and sell gold,” said Mihir Dange, COMEX
gold options floor trader for Arbitrage LLC.

Meanwhile, central banks in other regions are taking
measures to simulate their economies, which brightens potential
demand prospects for those regions.

Japan’s aggressive monetary easing, indications last week
that the European Central Bank may cut rates, and signs of a
growing recovery in China also lifted equity markets, with the
Dow Jones and S&P 500 stock indexes setting new closing record
highs.

While gold has benefited from the Bank of Japan’s pledge
last week to inject around $1.4 trillion into its economy to
battle deflation, its ability to strengthen on that news is not
expected to last long.

Gold rose 0.4 percent to $1,564.10 an ounce by 2:26
PM (1826 GMT), having rebounded from a one-week low of $1,553.10
an ounce.

An improving U.S. economic outlook and rallies in the equity
markets, however, could pressure bullion prices in the near
term, analysts said.

Copper gained 0.4 percent on dollar declines and improved
demand prospects from biggest consumers China and the U.S.

Three-month copper on the London Metal Exchange
closed up 0.46 percent at $7,610 a tonne, bouncing from a
session low of $7,510.

“Looking ahead, investors are focused on economic data out
of China, including GDP numbers, which will be a major driver
for base metals prices,” said Daniel Briesemann, analyst at
Commerzbank.

China’s annual economic growth is likely to have nudged
higher in the first three months of 2013 over the last quarter
of 2012, with fixed asset investment and factory output growth
in double digits, a Reuters poll showed.

Supply and demand factors moved energy markets, with crude
oil prices down after the International Energy Agency (IEA)
trimmed its forecast for energy demand growth this year. It was
the third top forecaster in the world to do so at a time of
growing oil supplies.

Brent crude oil fell below $105 per barrel, not far above an
eight-month low, after analysts cut forecasts for global oil
demand growth and U.S. crude oil stocks increased to their
highest in more than two decades.

London’s Benchmark Brent futures LCOc1 for May delivery
settled down $1.52 at $104.27 a barrel. U.S. crude
futures fell $1.13 to settle at 93.51 a barrel.

Meanwhile, natural gas rose 2 percent, ending higher
for a second straight day, with the front-month contract posting
a 20-month high even though a government report showed a weekly
inventory withdrawal below expectations.

Panic selling sent gold down to near $1,550 an ounce earlier in the session after European Commission documents showed Cyprus plans to sell 400 million euros worth of gold reserves to finance part of its bailout.

The metal later rebounded off its low as fears of more official-sector sales subsided. Central banks as a group had turned net buyers since 2010 as more emerging economies have added gold to their reserves as a hedge against credit risk.

Gold was also under pressure after minutes from the U.S. Federal Reserve policy meeting in March suggested it was on course to end its extraordinary bond buying stimulus by year-end.

“The loose monetary policy around the world is clearly favoring more on equity investments instead of gold,” said Michael Cuggino, portfolio manager of the $15 billion Permanent Portfolio Funds.

Spot gold was down 1.6 percent at $1,559.80 an ounce by 3:29 p.m. (1929 GMT), its biggest one-day decline since February 20.

U.S. Comex gold futures for June delivery settled down $27.90 an ounce at $1,558.80 an ounce.

Trading volume was about 20 percent below its 30-day average, preliminary Reuters data showed.

The March payrolls report, which was released after the FOMC meeting was held, showed weakness in the U.S. labor market, prompting some analysts to express doubts about the probability of the Fed reducing, or ending, its bond-buying program early.

While the S&P 500 rose to a record high on Wednesday and was up 11.4 percent year to date, gold was down 7 percent in the same period.

CYPRUS SELLS GOLD RESERVES

Gold’s losses snowballed after news of the Cypriot plan to sell its gold, which marked the biggest euro zone bullion sale in four years.

Although the third Central Bank Gold Agreement (CBGA3) limits how much gold euro zone central banks can sell to meet financing needs, investors are now worried other heavily indebted euro zone members may also start selling.

“The amount mentioned, 10 tonnes, is not large – we’ve seen that on average come out of exchange-traded funds this year every week,” Macquarie metals analyst Matthew Turner said.

“But it’s the first euro zone country to have said it will do this for a while,” Turner said.

Softer investor confidence in the metal after a fresh outflow from the world’s largest gold exchange-traded fund and a second cut in Goldman Sachs’ gold-price forecast in less than two months also weighed on prices.

“Funds are starting to think about their gold positions,” said David Lee, metal trader at Heraeus Precious Metals Management.

Among other precious metals, silver dropped 1 percent to $27.65 an ounce, after it rallied 2.5 percent on Tuesday for its biggest one-day rise since mid-February.

Palladium was down 0.8 percent at $718, sharply off an earlier three-month low, and platinum dropped 1.4 percent to $1,525.74 an ounce.

(Additional reporting by Clara Denina in London; Editing by William Hardy, Kenneth Barry and Peter Galloway)

Shortly after, a European Commission report showed Cyprus
agreed to sell excess gold reserves to raise around 400 million
euros to help finance its part of its bailout.

Both announcements battered gold, which failed to receive
follow-through buying on this week’s advance.

“I think gold was responding to a little bit of both (news
items),” said metals trader David Lee at Heraeus Precious Metals
Management in New York.

“The other day we went up on short covering. People saw the
failure to break above $1,600, so the shorts are dipping their
toes back in again and re-establishing their positions based on
that news,” he said.

Spot gold was off 1.18 percent at $1,566 an ounce at
12:16 p.m. (1616 GMT). U.S. gold futures for April
delivery lost $16.70 an ounce, or 1.03 percent, to $1,569.90 an
ounce.

According to an early release of minutes of the Fed’s March
meeting, a few U.S. Federal Reserve policymakers expected to
taper the pace of asset purchases by midyear and end them later
this year. Several others expected to slow the pace a bit later
and halt the quantitative easing program by year-end.

Prospects of interest rates climbing later in the year could
cause some investors to rethink the need to hold higher-yielding
assets like gold. It would also inhibit the ability to acquire
cheap money to purchase gold, which would be viewed as less
needed as a safe haven in an improving economy.

“A few members felt that the risks and costs of purchases,
along with the improved outlook since last fall, would likely
make a reduction in the pace of purchases appropriate around
midyear, with purchases ending later this year,” minutes from
the March 19-20 meeting said on Wednesday.

While the Fed’s scheduled release time for the March 19-20
meeting minutes was 2 p.m. EDT (1800 GMT), they sent them out
several hours early because of an accidental release on Tuesday.

The March payrolls report, which was released after the FOMC
meeting, showed weakness in the U.S. labor market, prompting
some analysts to express doubts about the Fed’s reducing or
ending the bond-buying program early.

Not long after gold headed lower on the Fed notes. It
slipped to session lows, pressured by European Commission
documents showing Cyprus plans to sell 400 million euros’ worth
of reserves to finance part of its bailout.

That move marks the biggest euro zone bullion sale in four
years. Although obstacles stand in the way of euro zone central
banks selling gold to meet financing needs, the Cypriot move
will focus attention on other heavily indebted euro zone gold
holders.

“The amount mentioned, 10 tonnes, is not large – we’ve seen
that on average come out of exchange-traded funds this year
every week,” Macquarie metals analyst Matthew Turner said.

“But it’s the first euro zone country to have said it will
do this, and the first euro zone country to sell gold, other
than Germany’s coin programme, for a while.”

New York gold traders were not alarmed by the size of
Cyprus’ purchase, but the announcement at a time when gold was
already struggling to reach $1,600 gave room for bearish
investors to reassert themselves.

“Funds are starting to think about their gold positions and
there was a lack of follow through on the short covering the
other day. It didn’t break back above the key technical $1,600
level to relaunch it on an uptrend,” said Heraeus’ Lee.

Softer investor confidence in the metal after a fresh
outflow from the world’s largest gold exchange-traded fund and a
further forecast cut from Goldman Sachs also weighed on prices.

The precious metal traded in its widest weekly range since
mid-February last week, sliding to a 10-month low at $1,539.74,
as funds favored other assets such as equities, before
rebounding sharply on the back of weak U.S. jobs data.

GOLDMAN SACHS CUTS FORECAST

Goldman Sachs cut its 2013 gold price forecast for the
second time in six weeks, to $1,545 an ounce from $1,610, a day
after UBS cut back its price view for this year. It is targeting
a gold price of $1,450 an ounce by year-end, it said.

“With our economists expecting few ramifications from Cyprus
and that the recent U.S. slowdown will not derail the faster
recovery they forecast in (the second half of 2013), we believe
a sharp rebound in gold prices is unlikely,” Goldman said in a
report.

The world’s largest gold-backed exchange-traded fund, New
York’s SPDR Gold Trust, reported a further outflow from
its gold holdings on Tuesday of just under five tonnes, bringing
its outflow for the year to more than 150 tonnes.

Gold-backed ETFs tracked by Reuters have
recorded outflows of 195 tonnes so far this year.

Silver slid 1.29 percent at $27.57 an ounce. The
metal rallied 2.5 percent on Tuesday, its biggest one-day rise
since mid-February.

The gold/silver ratio, which measures the number of silver
ounces needed to buy an ounce of gold, pulled back from last
week’s eight-month high as silver outperformed. An ounce of gold
now costs 56.8 ounces of silver, down from 57.9 on Friday.

Palladium fell to its lowest in three months under heavy
selling pressure in an overly long market, traders said, with
liquidation picking up as it broke through key chart levels.

Spot palladium trimmed losses to 0.83 percent at
$722.50 an ounce, having fallen as low as $702.97. Spot platinum
was down 1.39 percent at $1,525.50 an ounce.

(Additional reporting by Clara Denina; Editing by William Hardy
and Kenneth Barry)

Silver jumped 2.7 percent and copper surged 2.1 percent,
making the two metals the day’s biggest climbers. Oil and gold
were not far behind, helping push the Thomson Reuters-Jefferies
CRB index up 0.63 percent.

The commodities bellwether was up 1.81 points at 289 by the
end, lifted by closing gains in all but 4 of its 19 components.

“The idea that central banks are going to continue in their
monetary policies and we’ll see liquidity continue to expand
makes commodities an attractive investment, and that’s providing
support for oil prices,” said Gene McGillian, an analyst at
Tradition Energy in Stamford, Connecticut.

Brent crude oil futures posted their biggest gain since late
December. Brent May crude closed at $106.23 per
barrel, up $1.57. U.S. May crude closed at $94.20 a
barrel, an increase of 84 cents.

McGillian and other analysts said the weak dollar, the
likelihood of an easy money policy continuing in China and other
factors helped push money into metal, grains and softs markets.

The euro rose to $1.31, its highest since mid-March, making
dollar-denominated commodities more affordable for holders of
euros.

In China, government data showed inflation slowing. This
eased concerns the Chinese central bank would have to tighten
the money supply, which stoked commodities demand.

On Wednesday, the Federal Reserve’s Federal Open Market
Committee will issue minutes from its meeting of March 19-20.
Investors will look to the report for clues on whether Fed
officials were warming to the idea of scaling back their
extremely easy money policy.

Gold rose, as volatility in the currency market triggered by
Japan’s aggressive monetary easing plan lifted bullion’s appeal
as a hedge against inflation and currency fluctuations.

Bullion climbed to a one-week high as the dollar fell
against the euro and the yen, with the Japanese currency
recovering from a four-year low set against the greenback
earlier in the session.

In early business, the tame Chinese inflation readings
boosted gold prices.

Silver was up 2.5 percent at $27.93 an ounce, its
biggest one-day gain since early November.

Analysts said pent-up buying pushed gold up after it mostly
failed to rally after the Bank of Japan pledged last week to
inject about $1.4 trillion into the economy over two years.

“Gold is now slowly sinking in to the news that Japan is
printing a quick deal of money and liquidity is going to be
abundant again,” said Axel Merk, chief investment officer of
Merk Funds, which oversees $630 million in mutual fund assets.

Copper hit its highest since late March after the Chinese
inflation data, which underpinned a steady but modest seasonal
recovery in metal demand.

Three-month copper on the London Metal Exchange rose
to $7,638 a tonne, its highest since March 28, before closing
slightly lower at $7,625 a tonne.

Corn,, cocoa and soybeans also posted sharp
gains, with each rising around 1.5 percent.

U.S. corn futures were up 1.7 percent as traders unwound
bearish bets on the market ahead of a key government supply
report, traders said.

May soybean futures, the market’s front-month contract,
, also rose in pre-report positioning, while wheat futures
were mixed.

U.S. natural gas futures were the biggest losers,
falling 1.2 percent after declining by a similar amount in
previous session.

Gas prices fell as investors took profits amid mild weather
forecasts for the eastern half of the nation, but concerns about
below-average inventory levels limited the downside.

“The legislation delayed progress in negotiations. But since
that died, we’ve restarted discussions,” said Marty Littrel,
director of communications and community relations at power
supplier Big Rivers Electric Corp. in Kentucky, adding that
talks became active again this week.

Kentucky’s legislature adjourned on Tuesday for the rest of
2013, leaving proposed smelter bills in both legislative houses
to die on the floor.

Both bills were attempts to lower power costs for the two
aluminum smelters operating in Kentucky – Century’s
244,000-tonne-per-year Hawesville smelter and Rio Tinto Alcan’s
nearby Sebree smelter with aluminum output of 194,000 tonnes per
year.

Littrel added that Big Rivers also resumed talks with Rio
Tinto Alcan on Thursday, saying the company was
“trying to see if we can come up with a solution that’s
equitable for all and to get them both market power. I think
that’s what they both want.”

With metal prices low and production costs high, U.S.
aluminum producers struggle with thin margins. In its attempt to
cope, California-based Century, controlled by commodities giant
Glencore International, took the dramatic step of
pushing for legislation that would exempt smelters from a state
law requiring consumers to take power from only one supplier.
This legislative change would have let it seek power in the open
wholesale market.

Both Century and Rio Tinto broke their power deals with Big
Rivers in an attempt to find electricity in the spot market,
where prices are 25 percent lower than the fixed rate set in
their 15-year power contracts. Hawesville’s contract is due to
end in August and Sebree’s in January 2014.

The two aluminum producers account for about 70 percent of
the not-for-profit electric co-operative’s business.

KENTUCKY JOBS AT STAKE

Century’s spokesman Mike Dildine told Reuters on Thursday
that the company was committed to finding a way to keep
Hawesville open, but without cheaper power, it would shut the
plant.

“Our objective is to find competitive energy and to maintain
operations at Hawesville, and to keep those 700 direct
manufacturing jobs in western Kentucky,” he said.

Bryan Tucker, a spokesman for Rio Tinto Alcan, refused any
comment beyond what the company has said in the past, “which is
that we continue to evaluate all the options for Sebree’s
future.”

Big Rivers has given both companies the option to either
stay in its system and pay for electricity at cost or go to the
open market for power and pay for incremental costs that would
otherwise get passed on to the rest of its customers.

If they opt for spot power, Littrel said the aluminum
producers would give up their ability to return to Big Rivers on
a contractual basis if power prices rise again in the future.

In addition, he said, the smelters would have to agree to
abide by a Kentucky Public Service Commission’s decision if a
disagreement arises about rates, incremental costs or who should
pay for them.

Meanwhile, if the smelters do leave Big Rivers’ system, the
power generator may sell one of its plants or find other takers
for its power among other big industrial users, municipalities
or other utilities.

“We’ve got a good product, at a good price, and there are a
lot of other people who have expressed interest,” Littrel said.

Big Rivers’ rates are among the cheapest in the United
States, but are still higher than wholesale prices.

“They (the smelters) pay about $48 a megawatt-hour. You
won’t find a lot of places with rates that low,” he said.

“The legislation delayed progress in negotiations. But since
that died, we’ve restarted discussions,” said Marty Littrel,
director of communications and community relations at power
supplier Big Rivers Electric Corp. in Kentucky, adding that
talks became active again this week.

Kentucky’s legislature adjourned on Tuesday for the rest of
2013, leaving proposed smelter bills in both legislative houses
to die on the floor.

Both bills were attempts to lower power costs for the two
aluminum smelters operating in Kentucky – Century’s
244,000-tonne-per-year Hawesville smelter and Rio Tinto Alcan’s
nearby Sebree smelter with aluminum output of 194,000 tonnes per
year.

Littrel added that Big Rivers also resumed talks with Rio
Tinto Alcan on Thursday, saying the company was
“trying to see if we can come up with a solution that’s
equitable for all and to get them both market power. I think
that’s what they both want.”

With metal prices low and production costs high, U.S.
aluminum producers struggle with thin margins. In its attempt to
cope, California-based Century, controlled by commodities giant
Glencore International, took the dramatic step of
pushing for legislation that would exempt smelters from a state
law requiring consumers to take power from only one supplier.
This legislative change would have let it seek power in the open
wholesale market.

Both Century and Rio Tinto broke their power deals with Big
Rivers in an attempt to find electricity in the spot market,
where prices are 25 percent lower than the fixed rate set in
their 15-year power contracts. Hawesville’s contract is due to
end in August and Sebree’s in January 2014.

The two aluminum producers account for about 70 percent of
the not-for-profit electric co-operative’s business.

KENTUCKY JOBS AT STAKE

Century’s spokesman Mike Dildine told Reuters on Thursday
that the company was committed to finding a way to keep
Hawesville open, but without cheaper power, it would shut the
plant.

“Our objective is to find competitive energy and to maintain
operations at Hawesville, and to keep those 700 direct
manufacturing jobs in western Kentucky,” he said.

Bryan Tucker, a spokesman for Rio Tinto Alcan, refused any
comment beyond what the company has said in the past, “which is
that we continue to evaluate all the options for Sebree’s
future.”

Big Rivers has given both companies the option to either
stay in its system and pay for electricity at cost or go to the
open market for power and pay for incremental costs that would
otherwise get passed on to the rest of its customers.

If they opt for spot power, Littrel said the aluminum
producers would give up their ability to return to Big Rivers on
a contractual basis if power prices rise again in the future.

In addition, he said, the smelters would have to agree to
abide by a Kentucky Public Service Commission’s decision if a
disagreement arises about rates, incremental costs or who should
pay for them.

Meanwhile, if the smelters do leave Big Rivers’ system, the
power generator may sell one of its plants or find other takers
for its power among other big industrial users, municipalities
or other utilities.

“We’ve got a good product, at a good price, and there are a
lot of other people who have expressed interest,” Littrel said.

Big Rivers’ rates are among the cheapest in the United
States, but are still higher than wholesale prices.

“They (the smelters) pay about $48 a megawatt-hour. You
won’t find a lot of places with rates that low,” he said.