Europe is a "big question mark" for commodity markets but at the same time demand for aluminum is strong, Klaus Kleinfeld Alcoa Chairman and Chief Executive Officer, told CNBC on Friday at the Saint Petersburg International Economic Forum.

Aluminum prices have fallen more than $100 to below $1,900 per ton since last month, amid increasing market nervousness about the worsening of the euro zone debt crisis.

"The demand structure is very strong," Kleinfeld said, adding that demand increased by 10 percent last year and this year it was up by 7 percent.

"Physical demand is growing," the Alcoa CEO said, explaining that demand for full-body lightweight cars and planes was contributing to the increase.

"Aerospace demand is very strong, we're seeing an increase in automotive demand," he added.

However, the sharp fall in prices over the spring – aluminum was trading close to $2,300 per ton back in February - has brought trouble to many companies in the industry around the world.

"There are quite a number of players under water," Kleinfeld said, estimating that around one third of the world suppliers of aluminum were under water (as in, in finacial difficulties? can we spell out?).

While refraining from forecasting a price for aluminum, the Alcoa CEO said the market was now balanced and pointed out that in times of crisis people want to hold commodities.

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