27.10.2020

RUSAL announces its operating results for the third quarter of 2020 (“3Q20”)

 Moscow, October 27, 2020 - RUSAL (SEHK: 486; Moscow Exchange: RUAL), a leading global aluminium producer, announces its operating results for the third quarter of 2020 (“3Q20”)

 

Key highlights

 

Aluminium

•       Aluminium production[1] in 3Q20 totaled 939 thousand tonnes (+1.3% quarter-on-quarter (“QoQ”)), with Siberian smelters representing 93% of total aluminium output;

•       In 3Q20, aluminium sales amounted to 1,008 thousand tonnes (up 3.3% QoQ). During this period, sales of value added products (VAP[2]) increased by 25.4% QoQ, to 455 thousand tonnes, demonstrating a recovery of VAP share in total sales mix to 45% in 3Q20, compared to 37% in 2Q20, that was then affected by external market drivers related to the COVID-19 pandemic;

•       In 3Q20 the Company continued to successfully adjust its regional sales geography in line with existing markets conditions. While the European destination decreased in share to 37% (vs 46% in 2Q20), Asia’s and Russia&CIS’s sales grew to 32% (vs 27% in 2Q20) and 24% (vs 20% in 2Q20) respectively;

•       In 3Q20, the average aluminium realized price[3] increased by 6.5% QoQ to USD1,762/t. The increase was driven both by the London Metal Exchange (“LME”) QP[4] component (+6.0% QoQ to USD 1,618/t) and average realized premium component (+12.5% QoQ to 144/t). The increase of realized premium during 3Q20 is attributed to the growth of the VAP share in product sales mix and a positive shift in VAP upcharge, reflecting the gradual recovery of the global market conditions.

 

Alumina

•       In 3Q20, total alumina production slightly increased by 0.4% QoQ, to 2,018 thousand tonnes. The Company’s Russian operations accounted for 35% of total output.

 

Bauxite and nepheline ore

•       In 3Q20, bauxite production decreased by 1.6% QoQ, to 3,829 thousand tonnes. This decline of output was a result of unfavorable weather conditions in Guinea and Jamaica. Nepheline production increased by 2.9% QoQ, to 1,214 thousand tonnes.

 

Market overview[5]

•       As of the end of 9M 2020, global business recovery demonstrates positive trends, exceeding previous expectations and forecasts. As reported by J.P. Morgan Global Manufacturing PMI, global manufacturing activity rose to a 25-month high of 52.3 in September, up from 51.8 in August. New order intakes grew at the fastest rate for almost two and a half years, export business expanded for the first time in over two years and business sentiment hit the highest level since May 2018. Manufacturing expansion in Brazil, India, Germany, Canada and Australia hit record highs of above the 55.0 level. This upswing trend continued for several months across all regions, signaling stabilized operating conditions. Given the unprecedented high current PMI levels we expect the industry to normalize through 2021.

•       In 9M 2020, the global aluminum demand was down by 2.6% YoY to 46.7 million tonnes, improving from 6.6% decline YoY during 1H2020. The Rest of the World (“RoW”) demand contracted by 11.1% to 18.6 million tonnes, China however offset this with robust demand, demonstrating a strong growth of 3.9% to 28.1 million tonnes.

•       Global aluminium production in 9M 2020 grew by 1.5% to 48.4 million tonnes, taking into account the RoW decline of 0.1% YoY to 20.9 million tonnes and the 2.8% growth YoY in China, to 27.5 million tonnes. Overall, the global market was in surplus of 1.7 million tonnes during 9M 2020.

•       Operating capacity in China exceeded 38.0 million tonnes. Chinese unwrought aluminum and products exports collapsed by 18.6% YoY to 3.6 million tonnes in 9m 2020, while unwrought aluminum import during 9M 2020 amounted to 892 thousand tonnes vs 57 thousand tonnes for the same period of 2019. This shift followed a strongly negative export price arbitrage and the reduced demand overseas due to the pandemic. Thus, China is becoming an important balancing force for global aluminum industry absorbing excessive supply from the RoW markets.

•       In 9M 2020, aluminium inventories at LME warehouses declined by 22 thousand tonnes to 1.45 million tonnes. LME live warrants increased to the level of 1.20 million tonnes. Chinese regional stocks were moving in a downward trend over the period April – September and fell by 1.0 million tonnes to a total of 0.66 million tonnes from its highest level this year of 1.68 million tonnes marked at the beginning of April 2020.

 

KEY OPERATING DATA


GROUP PRODUCTION DATA[6]

(‘000 tonnes)

3Q20

2Q20

Change, % (QoQ)

9M20

9M19

Change, % (YoY)

Aluminium

939

927

1.3%

 

2,805

2,808

-0.1%

utilisation rate

96%

95%

-

 

96%

96%

-

Aluminium foil and packaging products

26.3

24.1

10.5%

 

76

73

3.1%

Alumina

2,018

2,009

0.4%

 

6,040

5,808

4.0%

Bauxite

3,829

3,892

-1.6%

 

11,298

12,021

-6.0%

Nepheline

1,214

1,181

2.9%

 

3,478

3,170

9.7%

 

GROUP SALES DATA

(‘000 tonnes)

3Q20

2Q20

Change, % (QoQ)

 

9M20

9M19

Change, % (YoY)

Aluminium sales

1,008

976

3.3%

 

2,898

3,069

-5.6%

BOAZ[7]

67

81

-17.0%

 

213

175

21.2%

Other third parties

6.4

2.7

133.9%

 

18.0

11.0

63.7%

 

 

 

 

 

 

 

 

Realized price, USD/t

1,762

1,654

6.5%

 

1,758

1,937

-9.2%

LME QP component

1,618

1,526

6.0%

 

1,616

1,805

-10.5%

Realised premium

144

128

12.5%

 

142

132

7.6%

Commodity component   

(100% of sales)

68

70

-2.7%

 

72

69

4.3%

   VAP upcharge component

   (100% of sales)

76

58

30.7%

 

70

63

10.8%

VAP upcharge over commodity

(VAP products only)

167

155

8.0%

 

163

175

-7.1%

 

 

 

 

 

 

 

 

VAP sales in tonnes

455

363

25.4%

 

1,239

1,103

12.3%

Share of VAP

45%

37%

8pp

 

43%

36%

7pp

 

 

 

 

 

 

 

 

Sales geography, %

 

 

 

 

 

 

 

Europe

37%

46%

-11pp

 

46%

53%

-7pp

Russia & CIS

24%

20%

4pp

 

22%

20%

2pp

Asia

32%

27%

4pp

 

25%

18%

7pp

America

7%

6%

1pp

 

7%

8%

-1pp

 

 

 

 

 

 

 

 

Alumina third party sales[8]

451

376

19.9%

 

1,227

1,241

-1.1%

Bauxite third party sales

21

75

-72.0%

 

96

98

-2.5%

 

 

GROUP EXTERNAL PURCHASES DATA

(‘000 tonnes)

3Q20

2Q20

Change, % (QoQ)

 

9M20

9M19

Change, % (YoY)

Alumina[9]

169

169

-

 

508

1,039

-51.1%

Bauxite

1,454

1,085

34.0%

 

3,620

4,560

-20.6%

 

 

 

 

 

 

 

 

ALUMINIUM PRODUCTION

(‘000 tonnes)

3Q20

2Q20

Change, % (QoQ)

 

9M20

9M19

Change, % (YoY)

Russia (Siberia)

 

 

 

 

Bratsk aluminium smelter

252

249

1.0%

 

752

754

-0.3%

Krasnoyarsk aluminium smelter

255

253

0.7%

 

763

760

0.4%

Sayanogorsk aluminium smelter

127

133

-4.5%

 

396

402

-1.5%

Novokuznetsk aluminium smelter

53.8

53.3

1.0%

 

160.7

160.8

-0.1%

Irkutsk aluminium smelter

106

103

2.8%

 

315

316

-0.2%

Khakas aluminium smelter

81

71

13.2%

 

227

219

3.8%

 

 

 

 

 

 

 

Russia — Other

 

 

 

 

 

 

 

Volgograd aluminium smelter

17.5

17.4

0.4%

 

52.3

52.1

0.3%

Kandalaksha aluminium smelter

17.2

17.9

-3.9%

 

53.2

54.2

-1.7%

 

 

 

 

 

 

 

Sweden

 

 

 

 

 

 

 

Kubikenborg Aluminium (KUBAL)

29.4

27.6

6.4%

 

86.5

91.1

-5.1%

 

 

 

 

 

 

 

Total production[10]

939

927

1.3%

 

2,805

2,808

-0.1%

 

 

 

Foil and packaging production results

(‘000 tonness)

3Q20

2Q20

Change, % (QoQ)

 

9M20

9M19

Change, % (YoY)

Russia

 

 

 

 

Sayanal

9.3

9.0

4.2%

 

26.9

29.7

-9.4%

Ural Foil

7.0

5.4

27.5%

 

18.7

17.6

6.2%

Sayana Foil

1.3

1.1

19.5%

 

3.6

2.9

26.4%

 

 

 

 

 

 

 

Armenia

 

 

 

 

 

 

 

Armenal

9.0

8.6

5.2%

 

26.5

23.2

13.9%

 

 

 

 

 

 

 

Total production

26.6

24.1

10.5%

 

75.7

73.4

3.1%

 

 

Other aluminium products output and silicon output

(‘000 toness)

3Q20

2Q20

Change,      % (QoQ)

 

9M20

9M19

Change, % (YoY)

Secondary alloys

5.6

3.5

61.7%

 

13.1

12.0

9.1%

Silicon

6.4

6.6

-2.3%

 

20.7

38.3

-45.9%

Powder

4.9

5.9

-15.9%

 

16.8

17.6

-4.5%

Wheels (‘000 units)

 

442

412

7.3%

 

1,444

2,339

-38.3%

 

ALUMINA PRODUCTION

 

(‘000 tonnes)

3Q20

2Q20

Change, % (QoQ)

 

9M20

9M19

Change, % (YoY)

Ireland

 

 

 

Aughinish Alumina

456

463

-1.5%

 

1,395

1,424

-1.9

 

 

 

 

 

 

 

Jamaica

 

 

 

 

 

 

 

Windalco

123

133

-7.9%

 

392

338

15.9%

 

 

 

 

 

 

 

Ukraine

 

 

 

 

 

 

 

Nikolaev Alumina Refinery

442

409

7.9%

 

1,266

1,247

1.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Russia

 

 

 

 

 

 

 

Bogoslovsk Alumina Refinery

248

258

-3.7%

 

745

764

-2.4%

Achinsk Alumina Refinery

228

214

6.8%

 

670

599

11.9%

Urals Alumina Refinery

227

231

-1.7%

 

686

683

0.4%

 

 

 

 

 

 

 

Guinea

 

 

 

 

 

 

 

Friguia Alumina Refinery

104.1

121.8

-14.5%

 

338

242

39.5%

 

 

 

 

 

 

 

Australia (JV)

 

 

 

 

 

 

 

Queensland Alumina Ltd[11]

191

180

5.8%

 

548

511

7.2%

 

 

 

 

 

 

 

Total alumina production

2,018

2,009

0.4%

 

6,040

5,808

4.0%

BAUXITE MINING

 

(‘000 tonnes)

3Q20

2Q20

Change,% (QoQ)

 

9M20

9M19

Change, % (YoY)

Jamaica

 

 

 

 

Windalco

432

486

-11.0%

 

1,395

1,427

-2.3%

 

 

 

 

 

 

 

Russia

 

 

 

 

 

 

 

North Urals

632

582

8.7%

 

1,703

1,758

-3.2%

Timan

1,045

967

8.0%

 

2,715

2,568

5.7%

 

 

 

 

 

 

 

Guinea

 

 

 

 

 

 

 

Friguia

381

334

14.1%

 

1,041

921

13.1%

Kindia

726

756

-3.9%

 

2,186

2,307

-5.3%

Dian-Dian

613

768

-20.2%

 

2,178

2,031

7.2%

 

 

 

 

 

 

 

Guyana

 

 

 

 

 

 

 

Bauxite Company of Guyana Inc.[12]

-

-

-

 

81

1,009

-91.9%

 

 

 

 

 

 

 

Total bauxite production

3,829

3,892

-1.6%

 

11,298

12,021

-6.0%

 

 

Nepheline ore production[13]

(‘000 tonnes wet)

3Q20

2Q20

Change, % (QoQ)

 

9M20

9M19

Change, % (YoY)

Kiya Shaltyr Nepheline Syenite

1,214

1,181

2.9%

 

3,478

3,170

9.7%

 

 

JOINT VENTURE OPERATING RESULTS

 

 

(‘000 tonnes wet)

Interest

3Q20

2Q20

Change, % (QoQ)

9M20

9M19

Change, % (YoY)

 

Boguchanskaya HPP

 

 

 

Electricity generation, mwh[14]

50%

2,895

4,207

-31.2%

11,737

11,785

-0.4%

 

 

 

 

 

 

 

 

Boguchansk aluminium smelter

 

 

 

 

 

 

 

Aluminium production ('000 tonnes)[15]

50%

72.8

72.5

0,4%

218

185

17.7%

 

 

 

 

 

 

 

 

Bogatyr Komir and Bogatyr Trans

 

 

 

 

 

 

 

Coal production (Kt)[16]

50%

4,583

4,857

-5.6%

15,625

16,086

-2.9%

 

Transportation volumes
(Kt of transportation)[17]

50%

587

824

-28.7%

2,280

3,000

-24.0%

 

 

Forward-looking statements

This press-release contains statements about future events, projections, forecasts and expectations that are forward-looking statements. Any statement in this announcement that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include those discussed or identified in the prospectus for RUSAL. In addition, past performance of RUSAL cannot be relied on as a guide to future performance. RUSAL makes no representation on the accuracy and completeness of any of the forward-looking statements, and, except as may be required by applicable law, assumes no obligations to supplement, amend, update or revise any such statements or any opinion expressed to reflect actual results, changes in assumptions or in RUSAL’s expectations or changes in factors affecting these statements. Accordingly, any reliance you place on such forward-looking statements will be at your sole risk.

 




[1] Aluminium production represented by salable products output (the number includes all facilities excluding Volgograd remelting of third parties metal).


[2] VAP includes alloyed ingots, slabs, billets, wire rod, wheels, high and special purity aluminium.


[3] The realised price includes three components: LME component, commodity premium and VAP upcharge.


[4] QP (quotation period) prices differs from the real time LME quotes due to a time lag between LME quotes and sales recognition and due to contract formula specialty.


[5] Unless otherwise stated, data for the “Market overview” section is sourced from Bloomberg, CRU, CNIA, IAI and Antaike.


[6] Unless stated otherwise the production volumes are calculated based on the pro rata share of the Company´s (and its subsidiaries´) ownership.


[7] “BOAZ” - Boguchansky aluminium smelter.


[8] Alumina third party sales excluding swaps.


[9] Alumina external purchase data excluding swaps.


[10] Above and below “total production” figures may not equal to the mathematical addition of the numbers presented in the table above. The difference is due to the rounding up of exact numbers (incl. decimals).


[11] The alumina production volume of Queensland Alumina Ltd is presented by 20% of its output i.e. based on an ownership pro rata basis


[12] In February 2020 the Company announced the suspension of operations of bauxite business in Guyana


[13] Nepheline ore is used as a feedstock for alumina production at the Achinsk alumina refinery.


[14] The energy generation volume of Boguchanskaya HPP is presented by 100% of its output (not on an ownership pro rata basis).


[15] The aluminium production volume of Boguchanskiy aluminium smelter is presented by 100% of its output (not on an ownership pro rata basis).


[16] The coal production volume of Bogatyr Komir is presented by 50% of its output i.e. based on an ownership pro rata basis.


[17] The transportation volume of Bogatyr Trans is presented by 50% of its output i.e. based on an ownership pro rata basis.




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