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 |
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.