Russian aluminium behemoth U.C. Rusal reported results for the final quarter and full year of 2019 yesterday. Though the firm came charging back from OFAC sanctions, Rusal warns that the coronavirus is likely to pose significant challenges to the firm and the wider aluminium market.
Rusal’s aluminium production in last year’s closing quarter totaled 949 thousand metric tons, off by 0.7 percent on the quarter. Sales of aluminium in the quarter rose by 1.5 percent to 1,107 thousand metric tons, with production of value-added goods rebounding from OFAC sanctions by 3.1 percent to a total of 443 thousand metric tons. Rusal’s customer base resided primarily in Europe, with 55 percent of its customers based on the continent, while domestic sales rose slightly to 24 percent and sales to American buyers increased to 7 percent.
For the full year Rusal produced 3,757 thousand metric tons of primary aluminium, holding steady with the prior year’s total. Sales of aluminium in 2019 totaled 4,176 thousand metric tons, up by 13.8 percent on the year, rising largely due to a sell-off of inventory still on hand as a result of OFAC sanctions earlier in the year and the commissioning of Boguchansky aluminium smelter (BoAZ) in the spring. Value-added sales fell by 7 percent on the year to 1,547 thousand metric tons, accounting for 37 percent of the year’s total sales. Buyers in Europe accounted for 54 percent of the total, up by 5 percent from the previous year.
Looking forward, Rusal issued a dire warning for the global aluminium market in the coming year, as the effects of the ongoing coronavirus situation is expected to continue to hamper both production and demand. Rusal says alumina refining operations in some regions of the People’s Republic of China have already been hampered by hindrances with both the supply of bauxite ore and the shipment of refined aluminium. As a result of “deteriorating” aluminium market fundamentals, analysts say they expect the situation to continue to cause significant difficulties for Rusal in the coming months.