MOSCOW – Russian aluminium producer United Company Rusal has reduced its first-quarter sales of value added products (VAP) by 44% from a year ago and by 22% from the last quarter of 2018 because of sanctions by the US.
Washington imposed the sanctions on Rusal, the world's largest aluminium producer outside China, in April 2018 but lifted them on January 27 as company co-owner Oleg Deripaska reduced his stake after months of talks and several extensions of the deadline for sanctions to take full effect.
Despite the lifting of the sanctions, the company said that its sales of VAP metal – alloyed ingots, slabs and some other products – were affected in the first quarter since the contracts were constrained by being signed while the company was still under the sanctions.
Sales of VAP metal fell to 259 000 t in the first quarter, while the share of their sales in Rusal's total sales declined to 29% from 48% a year ago and 38% in the last quarter of 2018.
"As a general rule, the volume of sales is recognised at the time of delivery to the customer. Due to VAP lead times from Russian smelters to the customer's plant, VAP sales recognised in [the first quarter] represent contracts that were serviced towards the end of [the fourth quarter of 2018] and at the beginning of [the first quarter]," Rusal said in a statement.
Rusal's first-quarter aluminium sales fell 7% from a year earlier to 896 000 t, while aluminium production declined by 0.3% to 928 000 t, it said..
China's State-controlled Chalco said in March that it boosted its annual aluminium output by 16% in 2018, putting it ahead of Rusal as the world's second-biggest publicly traded producer of the metal.
In the first quarter, Rusal's average realised price for aluminium fell by 7.8% from the previous quarter to $1 949/t, under pressure from a seasonally weak period and the trade wars and US-China tensions, Rusal said.
These trends will continue to negatively impact the aluminium price in the second quarter of 2019, Rusal said, despite the prospect of a potential agreement between China and the US and certain positive economic indicators.