RUSAL Q1 aluminium production increases amid signs of price recovery

UC RUSAL announced its operating results for the first quarter 2016. Aluminium production in first quarter totalled 916 thousand tons (-0.5 per cent QoQ). The smelters utilization rate was on average at 95 per cent. Russia Siberian smelters accounted for 94 per cent of total aluminium output.

First quarter 2016 aluminium sales increased by 9.2 per cent quarter-on-quarter to 957 thousand tons. This growth in sales is largely explained by the seasonal factors (lower sales in 4Q15 during the winter season) and the addition of primary aluminium produced at BOAZ (the plant is currently operating in the test mode). The share of VAP4 in total aluminium sales declined to 41 per cent in first quarter 2016 (versus 45 per cent in 4Q15) amid higher sales of primary aluminium. The volume of VAP sold remained largely flat.

In the first quarter 2016 the aluminium realised price reduced by -3.6 per cent quarter-on-quarter to USD1,666/t amid a reduction in average aluminium London Metal Exchange (“LME”) QP prices and the average premium. The delayed recognition of market premium benchmarks in the realized premiums and lower share of VAP in the product portfolio were largely behind the premium decline.

Rusal confirmed it would pay off $700 million in debt due in 2016 after lining up a refinancing earlier this week. The debt payment included $109 million of its own funds, it said.

"The company continues to actively explore further opportunities for the optimization of its debt structure," Oleg Mukhamedshin, Rusal's strategy director, said in a statement.