Russian aluminum giant UC RUSAL may start a temporary shutdown of the majority of its production capacities already in September if the U.S. sanctions remain in force, sources close to the company said commenting on Fitch Ratings’ outlook for the global aluminum industry.
Fitch reported that keeping sanctions against RUSAL would lead to growth of the aluminum price to $3,000 per ton in 2019 and cause a long-term deficit on the global market. If the U.S. abolishes the sanctions, the aluminum market will have normalized by 2019, and the price of aluminum will remain in the range of $2,100-2,300 per ton.
A source close to RUSAL believes the situation on the aluminum market is in fact worse than estimated by Fitch’s experts.
“If the sanctions are not lifted in the near future, the contracts will expire, and starting from October 1 the company’s products assigned for foreign customers will be again sent to warehouses, which already contain a part of aluminum that was not sold in April,” he said.
“In such situation, RUSAL will be forced to preserve not only production at the Nadvoitsy Aluminum Smelter, which is not in demand due to the sanctions, manufacturing only for the U.S., but also capacities of those plants, which make products for other foreign markets. Taking into account that RUSAL sold around 80% of its products for exports before the sanctions, the situation may be catastrophic not only for the company’s enterprises around the world, but for the entire global aluminum market,” the source said.
RUSAL said on August 6 it started a temporary shutdown of electrolysis capacities of its Nadvoitsy Aluminum Smelter in the republic of Karelia due to the U.S. sanctions. (Prime/Ukrainian metal)
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