Rusal resuming shipments to United States and Europe, CEO says

Russian aluminium producer Rusal is again shipping fresh primary aluminium to the United States and Europe following the removal of sanctions against the company in January, according to chief executive Evgenii Nikitin, Rusal’s press office told Fastmarkets on Tuesday April 2.

“The volume [of supplies to Europe and the US] has been fully restored on aluminium. It has not been resumed on alloys, though we are working toward that,” Rusal’s press office confirmed, quoting Nikitin.

Rusal’s press office reiterated that shipments have yet to return to their pre-sanctions levels, as previously reported by Fastmarkets last month.

“We expect to restore lost positions in all the traditional markets for the company, including Asia and America, with which difficulties arose last year. To date, we have already resumed [primary aluminium] deliveries to the American market,” Nikitin said.

Rusal had been forced out of the market for about 10 months, beginning in April 2018, when the US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed the sanctions on the world’s largest aluminium producer outside China and on its former director, Oleg Deripaska.

Partly because of these sanctions, regional aluminium premiums showed significant volatility because of the abrupt restrictions on Russia-origin material.

Fastmarkets AMM’s P1020A Midwest duty-paid premium shot to a multiyear high of 22-23 cents per lb in April 2019, its highest level since February 2015. The premium has since retreated to 19.00-19.25 cents per lb in its latest assessment on April 2, but is still at elevated levels, with the US 10% aluminium import tariff still in place.

Fastmarkets MB’s P1020A in-warehouse Rotterdam duty-paid premium jumped to a three-year high of $245-255 per tonne on April 16. That premium has since softened, and was $140-150 per tonne in the latest assessment on April 2.

Market participants were able to conduct new business with Rusal when OFAC announced the removal of the sanctions on January 27.

But consumers had already locked in their annual supply contracts during the contract negotiation season around September-October in 2018, months before the sanctions were removed. Still, Rusal was heard to be negotiating provisional invoices with US consumers prior to the removal, sources claimed at an aluminium conference held in San Diego, California, in January.

“Volumes for 2019 for most customers, including Novelis, are already contracted, but if there is a need for an increase, our partners will contact us. The same applies to customers in Japan,” Nikitin said.

Fastmarkets MB’s P1020A cif major Japanese ports (MJP) premium shot up to $180-200 per tonne in April 2018, its highest point since May 2015. The premium was $105-115 per tonne in the latest assessment on April 2.

In the US, market participants told Fastmarkets that they expected the producer to embark on an aggressive campaign ahead of the next contract negotiation season in September-October. US market participants claimed that they have not seen any fresh P1020 material from Rusal in the market yet.

“We hope that we will bring back our clients toward September, the contracting period for 2020,” Nikitin said, corroborating these speculations.

Sources in Europe told Fastmarkets that Glencore had already been selling most of Rusal’s commodity-grade aluminium as part of an existing long-term contract, and that material was being shipped from pre-sanctioned stocks throughout the duration of the sanctions at discounted premiums.

But European market participants also said that those imports have hit a pause, claiming that Russian metal was being held up at Russia’s port of Saint Petersburg amid a container shortage there.

One source believed that a wave of Rusal metal could arrive in Rotterdam in May because empty containers were in transit to the port of Saint Petersburg.

Justin Yang in London contributed to this report.