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By Melanie Burton
March 17 (Reuters) - Russian aluminium giant Rusal said on Friday its fourth-quarter core earnings jumped by more than a third on recovery in metal prices, and forecast the market to remain in good shape this year.
Quarterly earnings before interest tax and amortisation (EBITDA) rose 35 percent from a year earlier to $412 million, beating analyst expectations for a 31 percent rise to $400 million.
Hong Kong-listed Rusal was overtaken by China's Hongqiao as the world's top aluminium producer several years ago as it reduced its production capacity due to a fall in prices for aluminium, used in transport and packaging.
"We saw improved market conditions in the second half of the year," CEO Vladislav Soloviev said in a statement.
"Solid results were down to our dedication to cost management, production discipline, and a stronger focus on innovation and value added products development."
Full-year aluminium production edged up by 1.1 percent to 3.685 million tonnes, while costs per tonne fell 4.7 percent to $1,344 in the fourth quarter.
Rusal said it expects the aluminium market to remain in "good shape" in 2017, with demand growing by 5 percent and a global market deficit widening to 1.1 million tonnes.
It sees China's plans to constrict production next winter and help improve air quality tightening supply by around 1.2 million tonnes, while an anti-dumping case in the United States is likely to curb exports of semi-manufactured shapes of metal.
Aluminium prices rose 12 percent in London since the start of 2017, to $1900 on Friday, on expectations of less supply from China.
"In 2017, Chinese supply will be under pressure by significant cost inflation, environmental regulations as well as continuation of supply side reform," Chief Financial Officer Alexandra Bouriko told reporters on a conference call.
The company sees demand for global aluminium growing by 5 percent to 62.7 million tonnes this year, driven by 6.7 percent demand growth in China to 33.5 million tonnes.
Global aluminium supply will increase by 4.3 percent to 61.6 million tonnes, tempered by slower output growth in China, which is still seen up by 6 percent to 34.3 million tonnes.
Russia's VTB said rising prices and a recovery in volumes "might drive 1Q17F EBITDA closer to $500 million."
The company also said it had placed the first 1 billion yuan ($145 million) tranche of a Chinese yuan-denominated bond, known as a Panda bond, with a 5.5 percent per year coupon rate.
Rusal's shares jumped by 2 percent on Friday to HKD4.0 ($0.5153).
$1 = 7.7618 Hong Kong dollars Reporting by Melanie Burton; Editing by Richard Pullin and Sherry Jacob-Phillips