The United States bought aluminum – Newspaper Kommersant No. 223 (7424) dated 01.12.2022

Aluminum deliveries from Russia to the United States fell to their lowest levels in September amid rumors of possible bans on Russian imports or sanctions against Rusal. Although in reality such decisions have not yet been made, American counterparties note the refusal of Western banks to finance the supply of Russian metal. Nevertheless, in general, in January-September, aluminum exports from the Russian Federation in monetary terms increased both in the US and in the EU. Analysts note that the US market accounts for 5-6% of Rusal’s sales and the company will be able to redirect exports to other countries.

Imports of Russian aluminum and products from it (TN VED 76) to the United States in September amounted to $1.4 million, which is the minimum value since February 2019, when the US sanctions were lifted from Rusal, follows from the data of the US Department of Commerce. In September 2021, aluminum imports amounted to $25.4 million. Recall that from April to December 2018, Rusal was on the SDN list as an asset of businessman Oleg Deripaska, who fell under the sanctions.

Despite the fall in September, in January-September 2022, Russia increased aluminum exports to the United States by 29%, to $553 million. However, further growth prospects are a big question. The information background is negative: in October, the London Metal Exchange (LME) held consultations on a ban on the supply of aluminum, copper and nickel from Russia to its warehouses. Bloomberg reported in October that the US administration was considering an embargo on Russian aluminum or sanctions against Rusal.

In both cases, no official decisions were made. At the same time, although the LME did not begin to impose a ban on Russian shipments, the exchange noted that during the consultations, many North American and some European respondents said that banks were refusing to finance Russian metal for physical trading. For example, some respondents in the aluminum market said that where banks had previously insisted that the metal financed was “delivery to the LME”, they increasingly heard banks stipulate financing terms with the wording “material registered on the LME, excluding Russian brands. Some respondents also predicted that by the beginning of 2023, Western banks would hardly finance transactions with Russian metal, even in the absence of government sanctions. Asian respondents in the survey were in favor of maintaining the status quo within the LME.

The most important market for Rusal is Europe, which occupies a 40% share in the company’s revenue. According to Eurostat, aluminum supplies from Russia to the EU grew by 49% over the first nine months, to €2.3 billion. Russian aluminum exports to China reached record levels: deliveries there amounted to €1 billion in ten months of the year.

Russian deliveries account for about 5-7% of total US aluminum imports, says Alfa Bank’s Boris Krasnozhenov. Sales in the US have historically been about 7-10% of Rusal’s revenue, and the US can replace the volumes supplied by the Russian company, the expert believes. At the same time, Rusal can redirect these volumes to other markets.

The analyst says U.S. primary aluminum consumption was about 4.65 million tonnes in 2021, while production fell to 880,000 tonnes (less than 2% of total global primary aluminum production). Canada and China remain the main suppliers of aluminum to the US (38% and 13% of total imports in dollar terms in 2021).

Evgeny Zainullin