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

Rusal has projected softer fundamentals for global aluminum supply and demand in the first half of 2020. The aluminum maker said the effects of COVID-19 would impact the aluminum industry’s recovery, which began towards the end of 2019.


Global aluminum production, excluding China, as in a 300,000mt deficit in 2019, Rusal reported. At the beginning of 2020, 10pc of smelters continued operating at losses, despite lower production costs. Moreover, China is expected to suffer the consequences of higher supply and weaker demand from COVID-19 through H1 2020, as 27pc of the country’s smelters are operating with losses and alumina refining is suffering from logistical issues.


The company, which reported its 2019 and Q4 2019 earnings on Friday, forecasted 1.3pc growth in global aluminum demand in 2020 that will reach 66.1mn m. It will be driven by increased demand for the metal in the automotive sector, especially for manufacturing electric vehicles.


In 2019, Rusal reported lower revenue because of the significant decline in LME aluminum, as well as a decrease in aluminum premiums. According to Evgenii Nikitin, Rusal’s chief executive officer, the LME aluminum price fell by 15pc in 2019, contributing to Rusal’s revenue decreasing by 5.5pc.


Last year, the company’s aluminum production was flat at 3.75mn mt compared with 2018, while its alumina production increased by 1.1pc to 7.85mn mt from 7.77mn mt during the previous year. In Q4 2019, its aluminum production grew to 948,000mt from 943,000mt in Q4 2018, while its alumina production rose by 4.7pc to 2.05mn mt from 1.95mn mt during the same comparable period.


Rusal’s sales of primary aluminum and alloys in 2019 grew by 13.8pc to 4.17mn mt from 3.67mn mt in the previous year, while its Q4 2019 sales rose by 26.2pc to 1.1mn mt from 877,000mt in Q4 2018. Sales revenue decreased for primary aluminum and alloys due to a drop in average sales price to $1,920/mt from $2,259/mt in 2018. The company earned around $8bn from sales during the year, compared with $8.2bn in 2018.


The aluminum maker’s total revenue decreased by 5.5pc to $9.7bn in 2019 from $10.3bn during the previous year. Its adjusted EBITDA in 2019 also decreased to $966mn from $2.1bn in 2018.

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