Rusal to cut aluminum production by 250,000 tons

The decision was made amid a sharp increase in alumina prices
A reduction in aluminum production by 250,000 tons will be the first stage of Rusal’s capacity optimization program. This was reported by the company’s press service.
The decision was made amid a sharp increase in alumina prices and a high probability of continued unfavorable macroeconomic conditions. The company specified that Rusal is currently forced to purchase about a third of the required alumina on international markets at exchange prices, which negatively affects production profitability. Since the beginning of 2024, the price of alumina has almost doubled, exceeding $700 per ton. As a result, the share of alumina costs in the cost of aluminum exceeds 50%, while it usually amounted to 30-35%.
The increase in the cost of alumina is not offset by a corresponding increase in aluminum prices due to the weakened macroeconomics and excess supply of the metal on the market. Slowing economic growth and tightening monetary policy have led to a reduction in production volumes in key aluminum-consuming sectors, such as construction and automotive manufacturing, which has caused a drop in demand for basic metals.
The company assured that the optimization of production processes will not affect social obligations: Rusal will fully preserve jobs at all its enterprises and continue to implement social programs.
On October 31, Igor Ignashov, CEO of Rusal Trading House (OK Rusal – Trading House), told Vedomosti that test trading in aluminum on the St. Petersburg International Mercantile Exchange (SPIMEX) will begin before the end of the year. Aluminum prices on the Russian market currently depend on its quotations on the London Metal Exchange (LME). Trading on this platform is carried out through trading documents (warrants) confirming ownership of the metal. Following the US and UK sanctions imposed in April 2024, prohibiting the import of aluminum, nickel and copper from Russia to these countries, the warrants for Russian metals were suspended. Rusal is the largest aluminum producer in Russia and the only one producing primary aluminum. The company exports most of its metal. In 2023, Rusal produced 3.85 million tons of aluminum, which is 0.3% more than a year earlier, according to the company’s financial statements. The volume of primary aluminum and alloy sales last year amounted to 4.15 million tons (+7%), the average sales price was $2,439/t with a production cost of $2,173/t. The company’s revenue under IFRS last year decreased by 13% compared to 2023 to $12.2 billion, net profit – 6.4 times to $282 million. Adjusted EBITDA fell 2.6 times to $786 million. Asia’s share in Rusal’s revenue from aluminum sales in 2023 increased from 31% in 2022 to a record 53%. Metal sales in this region brought the company a total of $7.3 billion. The share of the European market decreased from 47% to 25%. Revenue from sales in Europe amounted to $3.5 billion. The share of the CIS countries increased from 8% to 11%, and sales in this market reached $1.5 billion.