Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Aluminium market continued recovery in Q2 amid support from domestic demand in China, stated Rusal, adding that despite reserved sales, China is experiencing constant low stock of the metal due to supply disruptions and strong seasonality factors.


Rusal’s aluminium production improved to 936,000mt in Q2 FY2021 (April-June), up by 0.4pc from Q1, according to the company’s operational update. Siberian smelters led production with a 93pc share. In Q2, aluminium sales rose by 7.9pc to 1.038mn mt from Q1 due to a low base in the prior quarter which was impacted by the normalization of inventories in the pipeline. The company continued to focus on value-added sales with VAP sales rising by 15.9pc to 542,000mt in Q2 from Q1. VAP’s contribution to total sales increased to 52pc in Q2 from 49pc in Q1.


In Q2, European sales were 40pc of total sales, down 2percentage points from the prior quarter. Russian and CIS sales grew to 26pc from 24pc in Q1.


Rusal’s average aluminium realized price rose by 15.5pc to $2,445/mt from Q1. Average realized premium component growth increased by 29.3pc to $227/mt.


In Q2, LME aluminum moved above $2,500/mt, while currently, SHFE is holding above CNY19,000/mt ($2,920.74/mt), according to the company release.


Rusal warned of significant downside risk posed by the Delta variant of COVID-19 to the global economy. Possible closures could lower the demand and price of commodities, including aluminum.


In H1, global primary aluminium demand rose to 33.9mn mt, up by 11.9pc from a year ago, while demand in the Rest of the World (RoW) grew by 14.6pc to 14.1mn mt. Demand in China increased by 10.1pc to 19.8mn mt.


Global supply of primary aluminium grew by 5.7pc in H1 from a year ago to 33.8mn mt, led by 8.9pc growth in China to 19.7mn mt. Production in RoW grew by 1.6pc to 14.1mn mt.


China’s firm de-carbonization commitment has started to disrupt the balance in the aluminium market in Q2. Power shortage in Yunnan resulted in production cuts of 800,000mt and delayed the commissioning of new projects. This has lowered China’s capacity to 39.88mn mt in June from 39.93mn mn in Q1.


Given the strained primary aluminium supplies in China, the start of a significant investment in scrap recycling hubs could potentially replace some primary metal deficit in the country, going ahead.


Rusal group’s production in Q2 and H1
(Unit: mt)Q2Q1Change QoQH1 2021H1 2020Change YoY
Utilisation rate96%97%-1pp97%96%1pp
Al foil and packaging27.226.61.90%53.849.19.70%

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