As a result of sanctions imposed by the United States and the United Kingdom, Rusal (MOEX: RUAL) may lose 1.5 million tons of exports, according to sources cited by Kommersant familiar with the company's analysis. This constitutes approximately one-third of the total export volume. The sanctions include a ban on the supply of Russian aluminum to the United States and a prohibition on accepting new metal batches on the LME exchange.
Concerns are mounting within the company that the cumulative impact of the sanctions will lead to production cuts approaching levels seen in 2008. According to a source interviewed by Kommersant, Rusal believes that the sanctions may affect the export of semi-finished products and value-added products. Roughly a quarter of the aluminum produced by Rusal is used in the production of semi-finished products.
Another threat lies in the risk of self-sanctions by Rusal's key clients, exacerbated by traders' and financial institutions' reluctance to work with Russian metal on the LME exchange. The source also notes that U.S. efforts to compel third countries such as Turkey and China to sever ties with Russia complicate the situation, posing a direct threat to supply chains, especially given the interconnected nature of global production networks. The absence of a reliable mechanism to trace metal in high-value products could lead processors to refrain from purchasing Russian metal.
In such a scenario, Rusal may be forced to redirect part of its aluminum to already nearly filled warehouses, leading to an increase in working capital and a decrease in profitability. On April 15, Rusal officially stated that the new restrictions would not affect the company's deliveries, access to the banking system, production, or product quality. However, according to a source familiar with the situation, the company is counting on discussions with the government regarding a series of measures to support the industry, including state purchases of up to half of the export volume, permission to reduce production to a quarter of current levels, and exemption of aluminum from export duties.
Source: Kommersant
