By Glenys Sim Nov. 27 (Bloomberg) -- The global aluminum surplus is expected to rise 36 percent next year as supply increases and demand falls, Goldman Sachs JBWere Pty forecast. Aluminum supply may exceed demand by 2.18 million metric tons, rising from an excess of 1.60 million tons this year, Goldman said. Further production cuts were “desperately needed in order to avoid a massive inventory-build,” analysts led by Malcolm Southwood wrote in the report yesterday. Rio Tinto Group and Alcoa Inc., the second and third-largest producers of the lightweight metal, are among companies to have idled or shuttered capacity on concern that market turmoil and a global economic slowdown will curb demand. Total production curtailments of “a little under three million tons a year” have been announced by the industry, Goldman said. The production cuts are “not on a sufficient scale to balance the market and, worryingly, with some input costs now falling, we understand that some Chinese capacity is actually restarting,” they said. Global consumption of the metal, used in cars, buildings and cans, will fall 1 percent next year, Goldman forecast. The aluminum cash price on the London Metal Exchange may average $2,214 a ton in 2009, declining from a forecast $2,601 this year, the analysts said. The price, which closed at $1,752.75 a ton yesterday, is down 26 percent this year and fell to a three-year low last week. To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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