During the first month of the US sanctions against Rusal and its major shareholders, the company sharply reduced aluminum exports. According to Russian Railways, aluminum shipments of RusAl to abroad have fallen by 70% by March, although, judging by the demand for electricity, the factories continue to operate. But at the same time there is a sharp, by a quarter, increase in aluminum loading inside the Russian Federation. Experts believe that Rusal is still transporting metal to warehouses, from where small traders can then buy products for export. According to Kommersant sources on the market, this strategy increases the working capital of the company by $ 200 million and more per month, which is a risk to business sustainability.
Rusal's plants in April reduced export shipments of aluminum by 70% compared to March - from 254.8 thousand tons to 76.7 thousand tons, Interfax reported with reference to the materials of Russian Railways. The indicator was also record low compared with April 2017 - exports fell by 68%. In March, there was an increase in aluminum shipments abroad by 13% compared to February.
The problems of "Rusal" are connected with the introduction on April 6 of US sanctions against the company and its key shareholders - Oleg Deripaska and Viktor Vekselberg. These individuals, as well as a number of other structures of businessmen were on the blacklist (SDN list), the US forbids to conduct business with its defendants. In mid-April, the London Metal Exchange (LME) imposed temporary restrictions on the aluminum trade of Rusal, many traders and partners officially refused to work with the company. As a result, sanctions caused an increase in world prices for metal, and in late April, the US Treasury softened the stance. On April 23, the regulator extended permission to US residents to work under contracts with Rusal until October 23. By this time, the ministry will consider an application to exclude a company from the SDN list (see "Kommersant" on April 24).
Despite the relief, no one announced the resumption of cooperation with "Rusal". However, all of the large factories in Siberia are clearly continuing their work: according to the Market Council (the regulator of energy markets) and the System Operator (SRO, Unified Energy System), electricity consumption has not declined. Electrolysis of aluminum requires huge energy costs, Rusal is the largest consumer of Siberia. But for the week from April 27 to May 3, demand here increased by 2.8% to 3.65 billion kWh in the same period of 2017, to 2.6% in April, to 17.7 billion kW • h. The increase in consumption in April in JI was explained by the decrease in air temperature in comparison with 2017.
Explain the gap between exports and production can suddenly increase dramatically aluminum shipments in the Russian Federation. According to the same data, JSC RZD, in April, aluminum loading from nine plants of "Rusal" increased by 25.6%, to 55.1 thousand tons. The main growth was recorded at enterprises in Sayanogorsk, Irkutsk, Krasnoyarsk, Novokuznetsk. Import shipments of alumina (raw materials for aluminum) increased by 5% compared to April 2017, to 375.9 thousand tons, and by 1% compared to March 2018. The shipment of alumina in Russia has more than doubled.
In the "Rusal" did not begin to explain the situation, earlier in the company noted that the JSC Railways incorrectly takes into account the container transport of metal. But railway operators have already spoken about a sharp decline in aluminum exports.
The head of Transcontainer Peter Baskakov reported that in April from the planned volume of 3,000 containers only about 700 were performed. Approximately two thirds of aluminum transported by Transcontainer under the contract with Rusal is exported, the contract continues to operate. Interfax sources said that the export of Rusal in the closed wagons of the First Freight Company (Freight One), Vladimir Lisin, had been suspended at the initiative of the carrier. Rusal has its own wagons for alumina and aluminum, but their share does not exceed 5-10% of the total demand. In JSC Russian Railways and Freight One refused to comment. In the Transcontainer, they did not respond to a request from Kommersant.
Where is the product of "Rusal" in Russia, it is not clear that domestic consumption in the country is traditionally much inferior to exports. Maxim Khudalov from ACRA believes that the growth of shipment in the Russian Federation is caused by the build-up of volumes in warehouses near the plants of "Rusal". This aluminum, according to the expert, will be purchased by small traders who are not afraid of sanctions and will try to use "different schemes" for export. Russian consumers could also increase the volume of purchases, but now is not the best time for this: aluminum has risen in price and it is unlikely that Rusal is ready to sell it at the old prices, even to save the load, Mr. Khudalov notes. Before the announcement of sanctions, aluminum at LME was $ 1966 per ton, in April the price reached almost $ 2600, after softening the sanctions went down, but on May 4 it reached $ 2315 per ton.
Based on the data of Russian Railways, it turns out that Rusal in April shipped about half of the aluminum output to warehouses, Kommersant source in one of the investment companies said. In his estimation, regardless of the classification of volumes (commodity stocks, goods in transit), this can lead to an increase in the working capital of "Rusal" by $ 200 million or more per month. If this continues, Kommersant's source stresses, "Rusal" will definitely require financial state support for the preservation of production and jobs.