The sanctions imposed on Rusal and its main owner, metals magnate Oleg Deripaska is creating huge concern in the world aluminium market. According to data by LME on Monday April 9, Eastern Europe accounted for 36% of LME aluminium inventories, the majority of which is supplied by Russia. The sanctions imposed on Rusal and its main owner, metals magnate Oleg Deripaska, mark the first time a major international company has been targeted by Washington. After the sanctions, London Metal Exchange said it would suspend Rusal's aluminium from its list of approved brands from April 17.
Rusal, the leading aluminium producer that churned out 3.7 million tonnes of aluminium in 2017, supplies about ten per cent of total US aluminium import. Rusal accounts for about 17% of supply outside of China, according to Harbor Intelligence. We are trying to analyse its aluminium ingot export data in last two years to understand the implications Rusal’s sanctions are going to have on its importing countries.
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According to the export-import data gathered from the Federation's major ports, the country exported 3.84 million tonnes of aluminium (both alloyed and non-alloyed ingots) in 2016, which increased to total at 3.90 million tonnes in 2017. In 2018, Russia is estimated to ship around 4.46 million tonnes of aluminium, up about 14 per cent from the corresponding period last year. Rusal contributes the major part of aluminium export by Russia.
Revenue realization or value-wise growth from aluminium exports in Russia over the last two is apparent from the trade data. The country exported aluminium worth US$6.8 billion in 2016, which increased 113 per cent to be valued at US$ 14.5 billion in 2016. This year, Russia is estimated to ship aluminium worth US$16 billion to the international markets, up 10 per cent from last year.
Commenting on the panic buying and aluminium price hike generated by Rusal’s sanction, Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group said, “Rusal’s export-driven revenue is substantial and you have to put some sort of doubt over that supply. It’s raising the supply risk premium.”
The major countries where Russia shipped its aluminium ingots to in 2017 are Japan, Turkey, Poland, Germany and Italy.
Rusal and Russia are synonymous as for aluminium export is concerned. With aluminium export remaining one of the major revenue driver for the economy, it is yet to be seen how sanctions of Rusal will affect the country’s economy in the short and medium term.
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