MOSCOW (Reuters) - Russian aluminium producer United Company Rusal Plc has reduced its first-quarter sales of value added products (VAP) by 44 percent from a year ago and by 22 percent from the last quarter of 2018 because of sanctions by the United States.
Washington imposed the sanctions on Rusal, the world’s largest aluminium producer outside China, in April 2018 but lifted them on Jan. 27 as company co-owner Oleg Deripaska reduced his stake after months of talks and several extensions of the deadline for sanctions to take full effect.
Despite the lifting of the sanctions, the company said that its sales of VAP metal - alloyed ingots, slabs and some other products - were affected in the first quarter since the contracts were constrained by being signed while the company was still under the sanctions.
Sales of VAP metal fell to 259,000 tonnes in the first quarter, while the share of their sales in Rusal’s total sales declined to 29 percent from 48 percent a year ago and 38 percent in the last quarter of 2018.
“As a general rule, the volume of sales is recognised at the time of delivery to the customer. Due to VAP lead times from Russian smelters to the customer’s plant, VAP sales recognised in 1Q19 represent contracts that were serviced towards the end of 4Q18 and at the beginning of 1Q19,” Rusal said in a statement.
Rusal’s first-quarter aluminium sales fell 7 percent from a year earlier to 896,000 tonnes, while aluminium production declined by 0.3 percent to 928,000 tonnes, it said..
China’s state-controlled Chalco said in March that it boosted its annual aluminium output by 16 percent in 2018, putting it ahead of Rusal as the world’s second-biggest publicly traded producer of the metal.
In the first quarter, Rusal’s average realised price for aluminium fell by 7.8 percent from the previous quarter to $1,949 per tonne, under pressure from a seasonally weak period and the trade wars and U.S.-China tensions, Rusal said.
These trends will continue to negatively impact the aluminium price in the second quarter of 2019, Rusal said, despite the prospect of a potential agreement between China and the U.S. and certain positive economic indicators.
Reporting by Polina Devitt; editing by Christian Schmollinger