Rusal’s Strategic Shift to Asia

Rusal’s Strategic Shift to Asia

Russian aluminium company, Rusal, is reshaping its sales portfolio for 2023. Notably, there has been a surge in sales to China and other Asian countries, with these regions contributing to 33% of Rusal’s revenue by mid-2023, a jump from 23% in 2022. This strategic pivot made Rusal the top aluminium exporter to China, with revenue there nearing $1.1 billion.

Facing Global Challenges

Despite an unfavorable market situation and substantial pressure, Rusal claims to maintain a stable position in global export markets. Factors contributing to this pressure include a 200% import duty imposed by the United States on Russian aluminium and complications with marine shipments due to sanctions against Russia. Furthermore, competitors are pushing to exclude the trading of Russian aluminium on the London Metal Exchange (LME), aiming to boost their financial standing as a result of potential price hikes.

Reactions from Aluminium Consumers

Novelis, one of the significant aluminium consumers, confirmed its decision to cease using Russian metal for its European plants. While the company still honors prior contracts with Rusal from before 2022, it refrains from new deals, with no plans for such in the 2024 supply tender.

LME’s Stance on Russian Aluminium

Russian aluminium stocks at LME warehouses surged to 81% by August’s end, up from 41% in January. Market players, including Alcoa, have advocated for excluding Russian aluminium from the exchange’s listings, arguing it disrupts proper price setting. However, LME opted not to limit aluminium imports from Russia.

Rusal’s Domestic Picture

Rusal highlights the export markets’ critical role for Russia’s aluminium sector, given the tens of thousands of jobs it secures. With a capacity to produce over 4.3 million tonnes of aluminium in its Russian facilities, domestic sales amount to about 1 million tonnes. Although this is a 37% rise since 2013, the potential for aluminium processing within Russia remains significantly untapped.

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