Al shipments to US won’t recover to pre-sanction levels in 2019, Rusal says

Rusal’s aluminium shipments to the United States are unlikely to reach pre-sanction levels this year, but the Russian aluminium producer does plan an eventual return to those levels.

Last year, before the sanctions, we planned to sell [in America] about 400,000 tonnes, which is slightly more than 10% [of total sales], and in the near future we plan to return to pre-sanctions shipment levels. Probably this year we will not be able to restore shipments [to those levels],” Rusal’s press office confirmed to Fastmarkets, quoting company director of finance Alexandra Buriko.

But Rusal also claims it has made strides in recovering some of the market share lost after sanctions forced the company out of the US market in April 2018.

“To America, we also restored shipments. Now shipments are at significant levels and we can negotiate sales of several hundred thousand tonnes throughout the year,” according to the company’s press office, confirming a quote from Rusal director of sales and marketing Roman Andryushin. “Sales in America are also high marginal, mainly alloys, which allow us – despite the import duty – to deliver those products without a loss.”

Indeed, even with Rusal permitted to resume sales to the US, the 10% Section 232 tariff on aluminium imports – levied over a year ago by US President Donald Trump – has cut into the US sales margins of overseas aluminium suppliers.

Extruders and billet producers have been particularly attentive to Rusal’s post-sanction activity, telling Fastmarkets that if demands holds the manner and pace in which Rusal reclaims its market share will dictate how quickly the billet premium declines. The company has not been heard to be aggressively buying its way back into the market, yet.

Fastmarkets AMM’s 6063 extrusion billet upcharge has held at 13-14 cents per lb since early January, which sources claim is partly due to the disciplined approach that Rusal has taken following the lifting of sanctions on January 27.

The billet upcharge had jumped to an all-time high of 17-19 cents per lb in June, two months after the US Treasury Department hit Rusal with sanctions.

The sanctions against Rusal motivated the producer to venture into other markets and has also increased its domestic Russian market share, an enduring focus for the company even with the sanctions removed.

The share of Rusal’s global sales in CIS region climbed to 24% in 2018 from 20% in 2017.

In general, the geography of our sales will remain without significant changes. The only significant exception is the increase [in market share] in the Russian market. We have consciously increased our share in the Russian market for several years in a row,” Buriko said, claiming the increased domestic market share will be partly at the expense of the company’s market share in other regions.

But the company also made gains in the European market, with those regional sales representing 49% of its 2018 global sales compared with 43% in 2017, Andryushin said.

The company has shifted its focus in 2019 to luring back its European and Asian customers.

“In 2019, the main objective of the company is to restore long-term contracts, mostly in Asia and Europe, and develop business processes that will ensure uninterrupted supply of high-quality metal to our customers, especially in Asia and Europe, where we expect the deficit to grow,” Andryushin said.