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UNITED COMPANY RUSAL PLC
(Incorporated under the laws of Jersey with limited liability)
(Stock Code: 486)
SECOND QUARTER 2020 TRADING UPDATE
This announcement is made by United Company RUSAL Plc ("RUSAL" or the "Company") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong).
Shareholders and potential investors are advised to exercise caution when dealing in the securities of RUSAL.
RUSAL announces its operating results for the second quarter of 2020 ("2Q20").
Key highlights
Aluminium
- Aluminium production1 in 2Q20 totaled 927 thousand tonnes (-1.4%quarter-on-quarter ("QoQ")), with Siberian smelters representing 93% of total aluminium output;
- In 2Q20, aluminium sales amounted to 976 thousand tonnes (up 6.8% QoQ). During this period, sales of value added products (VAP2) decreased by 14.0% QoQ, to 363 thousand tonnes, demonstrating a decline of VAP share in total sales mix to 37% (vs 46% in 1Q20) due to the COVID-19 pandemic;
1
2
Aluminium production represented by salable products output (the number includes all facilities excluding Volgograd remelting of third parties metal).
VAP includes alloyed ingots, slabs, billets, wire rod, wheels, high and special purity aluminium.
− 1 −
- In 2Q20 on the back of diversified client base, the Company successfully adjusted the regional sales geography in line with the new environment on the markets caused by COVID-19. European destination still dominates the mix, however it decreased in share to 46% (-9pp QoQ), while Asia's share grew to 27% (vs 15% in 1Q20). This shift reflects less severe lockdown measures in Asia and one-off arbitrage opportunity in China;
- In 2Q20, the average aluminium realized price3 decreased by 11.3% QoQ to USD1,654/t. The decrease was driven both by London Metal Exchange ("LME") QP4 component (-10.7% QoQ to USD 1,526/t) and average realized premium component (-17.9% QoQ to 128/t). The decline in premiums during 2Q20 is attributed to the decrease of VAP share in product sales mix and overall market conditions related to the pandemic.
Alumina
- In 2Q20, total alumina production was almost flat QoQ, at 2,009 thousand tonnes. The Company's Russian operations accounted for 35% of total output.
Bauxite and nepheline ore
- In 2Q20, bauxite production increased by 8.8% QoQ, to 3,892 thousand tonnes. The growth was driven by an increase in output at Timan due to low comparison base of 1Q20, affected by seasonal factor. Nepheline production increased by 9.0% QoQ, to 1,181 thousand tonnes.
Market overview5
- According to the JP Morgan Global Manufacturing PMI, global manufacturing activity increased from 42.4 in May to a 5-month high of 47.8 in June. It is still below 50 points, thus indicates contraction, but at a softer pace. Manufacturing conditions continued to recover all over the world following the severe disruption caused by COVID-19. While in the US, Brazil, France, Turkey and China manufacturing production expanded at a several months' highest rates, other national economies experienced slower declines. Although a potential second wave of COVID-19 continues to cause some uncertainty in the market, most countries are more optimistic towards 2H 2020.
3
4
5
The realised price includes three components: LME component, commodity premium and VAP upcharge.
QP (quotation period) prices differs from the real time LME quotes due to a time lag between LME quotes and sales recognition and due to contract formula specialty.
Unless otherwise stated, data for the "Market overview" section is sourced from Bloomberg, CRU, CNIA, IAI and Antaike.
− 2 −
- In 1H 2020, the global primary aluminium demand was down by 6.6% year-on-year ("YoY") to 30.3 million tonnes. Ex-China demand contracted by 15.4% to 12.3 million tonnes, while Chinese demand remained almost unchanged and shifted by a mere 0.5% to 18 million tonnes.
- Global aluminium production in 1H 2020 grew by 1.8% to 32.1 million tonnes, including the Rest of the World ("RoW") growth at 0.5% YoY to 13.9 million tonnes. In China, a 2.8% growth YoY to 18.2 million tonnes was seen for the same period. Overall, the global market was in surplus of 1.8 million tonnes during 1H 2020.
- With regards to cost curve, still around 12% of smelters in the RoW operate at a loss. Approximately 3.5 million tonnes of capacity outside of China operate with costs above current prices. Since the beginning of this year, around 0.6 million tonnes of RoW capacity was curtailed.
- Operating capacity in China reached 37.2 million tonnes. Chinese unwrought aluminum and products exports collapsed by 20.6% in 1H20 YoY to 2.37 million tonnes on strongly negative export price arbitrage.
- In 1H 2020, aluminium inventories at LME warehouses grew above 1.6 million tonnes, with an overall increase of 165 thousand tonnes compared to the level at the end of last year. LME live warrants grew to the level of 1.47 million tonnes. Chinese regional stocks continued to decline steeply in June 2020 and fell 960 thousand tonnes to 0.7 million tonnes from its highest level this year of 1.68 million tonnes as of the beginning of April 2020.
KEY OPERATING DATA
GROUP PRODUCTION DATA6
Change, | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Aluminium | 927 | 940 | -1.4% | 1,867 | 1,867 | - |
utilisation rate | 95% | 97% | - | 96% | 96% | - |
Aluminium foil and | ||||||
packaging products | 24.1 | 25.0 | -3.6% | 49.1 | 48.8 | 0.6% |
Alumina | 2,009 | 2,013 | -0.2% | 4,022 | 3,850 | 4.5% |
Bauxite | 3,892 | 3,577 | 8.8% | 7,469 | 8,073 | -7.5% |
Nepheline | 1,181 | 1,083 | 9.0% | 2,264 | 2,153 | 5.1% |
6 Unless stated otherwise the production volumes are calculated based on the pro rata share of the Company's (and its subsidiaries') ownership.
− 3 −
GROUP SALES DATA | ||||||
Change, | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Aluminium sales | 976 | 914 | 6.8% | 1,890 | 1,978 | -4.4% |
BOAZ7 | 81 | 65 | 25.5% | 145 | 106 | 37.8% |
Other third parties | 2.7 | 8.8 | -68.8% | 11.5 | 2.5 | 361.0% |
Realized price, USD/t | 1,654 | 1,864 | -11.3% | 1,756 | 1,960 | -10.4% |
LME QP component | 1,526 | 1,708 | -10.7% | 1,615 | 1,835 | -12.0% |
Realised premium | 128 | 156 | -17.9% | 141 | 125 | 12.8% |
Commodity component | ||||||
(100% of sales) | 70 | 79 | -10.7% | 74 | 64 | 16.1% |
VAP upcharge | ||||||
component (100% of | ||||||
sales) | 58 | 77 | -25.2% | 67 | 62 | 8.8% |
VAP upcharge over | ||||||
commodity (VAP | ||||||
products only) | 155 | 167 | -7.3% | 161 | 181 | -11.0% |
VAP sales in tonnes | 363 | 422 | -14.0% | 785 | 673 | 16.5% |
Share of VAP | 37% | 46% | -9pp | 42% | 34% | 8pp |
Sales geography, % | ||||||
Europe | 46% | 55% | -9pp | 51% | 51% | - |
Russia & CIS | 20% | 22% | -2pp | 21% | 20% | 1pp |
Asia | 27% | 15% | 12pp | 21% | 20% | 1pp |
America | 6% | 7% | -1pp | 6% | 9% | -3pp |
Alumina third party sales8 | 376 | 400 | -6.0% | 776 | 791 | -1.9% |
Bauxite third party sales | 75 | - | - | 75 | 67 | 12.4% |
GROUP EXTERNAL PURCHASES DATA | ||||||
Change, | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Alumina | 349 | 355 | -1.6% | 704 | 850 | -17.1% |
Bauxite | 1,085 | 1,081 | 0.4% | 2,166 | 3,076 | -29.6% |
7
8
"BOAZ" - Boguchansky aluminium smelter.
Alumina third party sales excluding swaps.
− 4 −
ALUMINIUM PRODUCTION | ||||||
Change, | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Russia (Siberia) | ||||||
Bratsk aluminium smelter | 249 | 251 | -0.7% | 500 | 501 | -0.3% |
Krasnoyarsk aluminium | ||||||
smelter | 253 | 256 | -1.1% | 509 | 504 | 1.0% |
Sayanogorsk aluminium | ||||||
smelter | 133 | 135 | -1.2% | 268 | 266 | 0.9% |
Novokuznetsk aluminium | ||||||
smelter | 53.3 | 53.5 | -0.3% | 106.8 | 106.7 | 0.1% |
Irkutsk aluminium smelter | 103 | 105.5 | -2.1% | 209 | 210 | -0.6% |
Khakas aluminium smelter | 71 | 74.6 | -4.2% | 146 | 146 | 0.1% |
Russia - Other | ||||||
Volgograd aluminium | ||||||
smelter | 17.4 | 17.4 | -0.9% | 34.8 | 34.4 | 1.0% |
Kandalaksha aluminium | ||||||
smelter | 17.9 | 18.1 | 0.3% | 36.0 | 36.0 | 0.1% |
Sweden | ||||||
Kubikenborg Aluminium | ||||||
(KUBAL) | 27.6 | 29.4 | -5.9% | 57.0 | 62.4 | -8.7% |
Total production9 | 927 | 940 | -1.4% | 1,867 | 1,867 | - |
9 Here and further "total production" may not equal to the arithmetic addition of the numbers presented above in the table. The difference arises due to the roundoff of exact numbers (incl.decimals).
− 5 −
Foil and packaging production results | ||||||
Change, | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Russia | ||||||
Sayanal | 9.0 | 8.6 | 4.5% | 17.5 | 20.1 | -12.8% |
Ural Foil | 5.4 | 6.3 | -13.1% | 11.7 | 11.3 | 3.4% |
Sayana Foil | 1.1 | 1.2 | -10.5% | 2.3 | 2.0 | 17.4% |
Armenia | ||||||
Armenal | 8.6 | 8.9 | -3.8% | 17.5 | 15.3 | 13.9% |
Total production | 24.1 | 25.0 | -3.6% | 49.1 | 48.8 | 0.6% |
Other aluminium products output and silicon output | ||||||
Change, | Change, | |||||
('000 toness) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Secondary alloys | 3.5 | 4.1 | -15.1% | 7.5 | 8.2 | -8.4% |
Silicon | 6.6 | 7.7 | -14.4% | 14.3 | 26.6 | -46.4% |
Powder | 5.9 | 6.0 | -1.9% | 11.8 | 11.3 | 5.0% |
Wheels ('000 units) | 412 | 590 | -30.1% | 1,002 | 1,628 | -38.5% |
− 6 −
ALUMINA PRODUCTION | ||||||
Change, | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Ireland | ||||||
Aughinish Alumina | 463 | 476 | -2.77% | 939 | 949 | -1.0% |
Jamaica | ||||||
Windalco | 133 | 136 | -1.9% | 269 | 218 | 23.6% |
Ukraine | ||||||
Nikolaev Alumina Refinery | 409 | 416 | -1.6% | 825 | 833 | -1.0% |
Russia | ||||||
Bogoslovsk Alumina | ||||||
Refinery | 258 | 240 | 7.39% | 497 | 507 | -1.9% |
Achinsk Alumina Refinery | 214 | 228 | -6.4% | 442 | 392 | 12.7% |
Urals Alumina Refinery | 231 | 228 | 1.44% | 459 | 454 | 1.0% |
Guinea | ||||||
Friguia Alumina Refinery | 121.8 | 111.9 | 8.8% | 234 | 154 | 51.6% |
Australia (JV) | ||||||
Queensland Alumina Ltd10 | 180 | 177 | 1.6% | 357 | 343 | 4.2% |
Total alumina production | 2,009 | 2,013 | -0.2% | 4,022 | 3,850 | 4.5% |
10 The alumina production volume of Queensland Alumina Ltd is presented by 20% of its output i.e. based on an ownership pro rata basis
− 7 −
BAUXITE MINING | ||||||
Change,% | Change, | |||||
('000 tonnes) | 2Q20 | 1Q20 | (QoQ) | 1H20 | 1H19 | % (YoY) |
Jamaica | ||||||
Windalco | 486 | 477 | 1.8% | 963 | 960 | 0.3% |
Russia | ||||||
North Urals | 582 | 489 | 18.9% | 1,071 | 1,130 | -5.3% |
Timan | 967 | 703 | 37.0% | 1,670 | 1,589 | 5.1% |
Guinea | ||||||
Friguia | 334 | 327 | 2.1% | 660 | 544 | 21.5% |
Kindia | 756 | 703 | 7.5% | 1,459 | 1,789 | -18.4% |
Dian-Dian | 768 | 797 | -3.6% | 1,565 | 1,410 | 11.0% |
Guyana | ||||||
Bauxite Company of | ||||||
Guyana Inc.11 | - | 81 | - | 81 | 651 | -87.5% |
Total bauxite production | 3,892 | 3,577 | 8.8% | 7,469 | 8,073 | -7.5% |
Nepheline ore production12 | ||||||
Change, | Change, | |||||
('000 tonnes wet) | 2Q20 | 1Q20 % (QoQ) | 1H20 | 1H19 | % (YoY) | |
Kiya Shaltyr Nepheline | ||||||
Syenite | 1,181 | 1,083 | 9.0% | 2,264 | 2,153 | 5.1% |
- In February 2020 the Company announced suspension of operations of Bauxite business in Guyana
- Nepheline ore used as a feedstock for alumina production at the Achinsk alumina refinery.
− 8 −
JOINT VENTURE OPERATING RESULTS | |||||||||
Change, | Change, | ||||||||
('000 tonnes wet) | Interest | 2Q20 | 1Q20 | % (QoQ) | 1H20 | 1H19 | % (YoY) | ||
Boguchanskaya HPP | |||||||||
Electricity generation, | |||||||||
mwh13 | 50% | 4,207 | 4,636 | -9.3% | 8,843 | 7,360 | 20.2% | ||
Boguchansk | |||||||||
aluminium smelter | |||||||||
Aluminium production | |||||||||
('000 tonnes)14 | 50% | 72.5 | 72.2 | 0.4% | 144.7 | 110.7 | 30.7% | ||
Bogatyr Komir and | |||||||||
Bogatyr Trans | |||||||||
Coal production (Kt)15 | 50% | 4,857 | 6,185 | -21.5% | 11,041 10,513 | 5.0% | |||
Transportation | |||||||||
volumes (Kt of | |||||||||
transportation)16 | 50% | 824 | 869 | -5.2% | 1,692 | 2,165 | -21.8% |
By order of the Board of Directors of
United Company RUSAL Plc
Aby Wong Po Ying
Company Secretary
27 July 2020
As at the date of this announcement, the executive Directors are Mr. Evgenii Nikitin, Mr. Evgeny Kuryanov and Mr. Evgenii Vavilov, the non-executive Directors are Mr. Marco Musetti, Mr. Vyacheslav Solomin and Mr. Vladimir Kolmogorov, and the independent non-executive Directors are Dr. Elsie Leung Oi-sie, Mr. Dmitry Vasiliev, Mr. Bernard Zonneveld (Chairman), Dr. Evgeny Shvarts, Mr. Randolph N. Reynolds, Mr. Kevin Parker, Mr. Christopher Burnham and Mr. Nick Jordan.
All announcements published by the Company are available on its website under the links http://www.rusal.ru/en/investors/info.aspxand http://rusal.ru/investors/info/moex/, respectively.
- The energy generation volume of Boguchanskaya HPP is presented by 100% of its output (not on an ownership prorata basis).
- The aluminium production volume of Boguchansk aluminium smelter is presented by 100% of its output (not on an ownership pro rata basis).
- The coal production volume of Bogatyr Komir is presented by 50% of its output i.e. based on an ownership pro rata basis.
- The transportation volume of Bogatyr Trans is presented by 50% of its output i.e. based on an ownership pro rata basis.
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United Company RUSAL plc published this content on 27 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2020 00:25:03 UTC