Rusal suspends alumina shipments from its Nikolaev refinery in Ukraine; Fear of supply disruptions heightens

On Monday, February 28, Russian aluminium producer Rusal, the world’s top metal producer ex-China, suspended alumina shipments from its Nikolaev refinery in Ukraine, resulting in increased supply disruptions across the alumina and aluminium market, reported consultancy firm Wood Mackenzie.

Ami Shivkar, the principal analyst in Wood Mackenzie’s aluminium team, said alumina produced at Nikolaev refinery is transported to Rusal’s aluminium smelters in Russia, supporting 900 thousand tonnes per annum of output, which is 23 per cent of Rusal’s primary aluminium production.

However, Shivkar noted that “a halt in alumina shipments doesn’t mean an immediate cut in smelter output although the supply chain in Russia is tight, with weeks of alumina stocks on site rather than months.”

He added that Rusal may fetch some alumina from its 2 million tonnes per year Aughinish refinery in Ireland to feed its smelters.

Shivkar also pointed out that sanctions on Rusal could disable its counterparties to interact with the group as was the case in 2018, resulting in an adverse impact on Rusal’s overseas alumina assets.

Rusal accounts for about 6 per cent of global supplies estimated by analysts at around 70 million tonnes this year.

US sanctions on Rusal imposed in April 2018 and lifted in early 2019 created havoc disruptions for firms in the transport, construction, and packaging industries. The resulting scramble for aluminium saw prices jump 30% in just a few days.

Similarly, the present Russia-Ukraine conflict has already lifted the global aluminium benchmark price to a new high at US$3,450 per tonne. Analysts say they expect further gains after more sanctions imposed by Western countries over the weekend.