Struggling beneath the yoke of aluminium tariffs and the millstone of sanctions imposed by the United States Treasury Department, Russian Federation smelter U.C. Rusal’s exports of aluminium appeared to rise sharply last month. However, according to sources, the movement of aluminium was to ports in an effort at freeing up space around the company’s plants.
Per Russian news agency Interfax, Rusal exported 197 thousand metric tons in May, tripling its output from the previous month. The agency referenced data from Russian Railways for the year-to-date total, which was 972 thousand metric tons, down by 16 percent from the year prior.
Sources with knowledge of the situation told Bloomberg say that the movement of raw aluminium along Russia’s railways was not for export, however. As the firm continues to face severe difficulty selling aluminium, Rusal has chosen to free up space around smelters by relocating stockpiles to storage facilities at Russian docks.
In addition to increasing space around Siberian smelters, laying up stockpiles at ports in St. Petersburg and Vladivostok make shipping significantly easier once the virgin aluminium is sold, explained the anonymous source.
Though Rusal has been subject to crippling sanctions placed upon it by the United States government since April 6, the company has resumed shipments to some customers with preexisting contracts. The Treasury Department’s deadline extension for third-party compliance with the sanctions to October allowed for that resumption according to sources who spoke to Reuters.
Rusal shipped 3.95 million metric tons of aluminium over the course of 2017. Forty-two percent of that total was bound for European destinations.
Although U.S. Treasury Department sanctions are still firmly in place, Oleg Deripaska has begun to take steps to reduce his ownership in En+ Group, which has a sizable interest in Rusal. However, coupled with the Trump administration’s blanket 10-percent tariffs on imported aluminium, problems continue to grow for Rusal operations overseas as well as for several trading partners who rely upon a steady stream of raw aluminium from the world’s second-largest producer of it.
The Treasury Department placed sanctions upon Deripaska, Rusal, and En+ Group, among several other Russian businesses and individuals, in April, alleging that the named individuals participated in activities intended to destabilize and manipulate events around the world, including charging that the group allegedly interfered in the 2016 presidential elections in the United States. Experts believe the company may have hope in a resolution by the end of the year, noting that the October extension may well be a move to give Deripaska more time to divest his ownership in the company.