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United Company RUSAL Plc (Paris:RUSAL) (Paris:RUAL):
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UNITED COMPANY RUSAL PLC(Incorporated
under the laws of Jersey with limited liability)(Stock Code:
486)
FIRST QUARTER 2017 TRADING UPDATE
This announcement is made by United Company RUSAL Plc (“UC
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) and applicable French laws and regulations.
Shareholders and potential investors are advised to exercise
caution when dealing in the securities of UC RUSAL.
UC RUSAL announces its operating results for the first
quarter (“1Q17”) 20171.
Aluminium
- Aluminium production2 in 1Q17 totaled
910 thousand tonnes (-2.1% QoQ), with Siberian smelters
representing 94% of total aluminium output. The total production
dynamics is largely explained by the number of calendar days in the
periods (92 days in 4Q16 and 90 days in 1Q17). Smelters utilization
remained on average at a high of 95%.
- In 1Q17 aluminium sales totaled 985
thousand tonnes (+6.8% QoQ), including value added product (VAP3)
sales of 436 thousand tonnes (+7.8% QoQ). The increased level of
inventories in 4Q16 which were subsequently sold out in 1Q17 was
largely behind the QoQ total sales dynamics.
- In 1Q17 the average aluminium realized
price4 increased by 8.3% QoQ to USD1,949/t. The increase was driven
by positive dynamics in London Metal Exchange (“LME”) QP5
component (+9.0% QoQ to USD1,796/t) and average realized premium
component growth (+1.4% QoQ to USD153/t).
Alumina
- In 1Q17, total alumina production
declined by 2.6% QoQ, totaling 1,889 thousand tonnes. Russian
operations accounted for 37% of total output. Production volumes at
refineries were largely in line with production plans. Seasonal
repair works performed at Windalco, Auginish and Bogoslovsk were
offset by production performance at Achinsk and Urals.
- Capacity upgrades which were completed
at Nikolaev and Urals refineries were largely behind the YoY
production increase at refineries in 1Q17.
Bauxite and nepheline ore
- In 1Q17, bauxite output totaled 2,869
thousand tonnes (+1.0% QoQ). Nepheline output increased by 7.9% QoQ
to 1,056 thousand tonnes. Production volumes at Timan and Kia
Shaltyr (nepheline ore6) increased by 8.0% and 7.9% QoQ to meet the
production plan needs of the Urals and Achinsk alumina refineries,
respectively. North Urals production volumes were also driven by
the performance of Bogoslovsk refinery. Kindia production in 1Q17
remained below the historic average but according to mining works
schedule we anticipate the volumes to improve in 2H17. Bauxite
Company of Guyana production increased by 13.2% QoQ, which is
largely explained by a low base effect.
Market overview7
- The world economy witnessed a broader
based growth in 1Q17, with an increase in business activity,
particularly in the advanced economies. Consumer spending
particularly for cars, durable goods sales and fixed asset
investments continue to be the main driver for metal demand.
- In the Eurozone, household spendings
increased, unemployment fell, consumer confidence grew and interest
rates remained low. Fixed asset investments in the US are expected
to grow by 3.5% in 2017 YoY, boosted by the possibility of approval
of USD1 trillion investment plan. Japanese industrial production
continues to rise and exports are expected to grow by 4.5% in 2017
YoY boosted by the strong demand in the neighbouring Chinese
economy.
- The Chinese economy showed strong
growth at the beginning of the year. The official PMI reached 51.8
in March 2017, while industrial production grew 7.6% in March YoY
and GDP in 1Q17 went up 6.9% YoY vs 6.8% estimated growth.
- The LME aluminium price reached its
highest level of USD1,955/t in March 2017 and has, on average
remained stable above USD1,900/t in 1Q17. This was attributable to
a growing global metal deficit driven by the US, EU and the
expectation of supply disruptions in China coupled with significant
production cost inflation.
- Aluminum premiums in key consuming
regions continued to improve in 1Q17 with, on average, a 27.8% rise
compared to 4Q16. This was due to strong demand and a reduced
supply in key regions after various smelting capacity
reduction/closures (North America, Australia).
- The ROW (rest of the world) reported
that inventories have approached to pre-crisis levels of 3.6 mn
tonnes in March 2017 and the days of consumption decreased to 46
days from 110 days in 2014-15 and continue to decline at rapid
pace.
- Based on CRU estimates, aluminium
demand excluding China rose by a strong 3.4% in 1Q17 YoY to 7.1 mn
tonnes while production (including eight non-reporting countries)
increased by 1.2% YoY to 6.7 mn tonnes, leaving the ROW aluminium
market with approximately 0.4 mn tonnes deficit in 1Q17.
- According to the CNIA’s production
figures, in 1Q17 China`s primary aluminum production rose 14.2% Y-Y
to 8.191 Mt. However, the annualized production fell in February by
4.9% MoM and in March by 3.5% MoM, which may witness the beginning
of supply matching process in line with China’s policy to strictly
control overproduction
- In terms of additional regulatory
measures on April 12, 2017, a joint regulation was issued by the
NDRC, MIIT, Ministry of lands and resources, MEP “On the word to
streamline the situation with illegal projects in the primary
aluminium industry”. The preamble of the regulation states the
necessity to take measures to standardize investment in the
construction of aluminium projects and to strictly control
overproduction. The government of Changji country (Xinjang)
subsequently issued a notice that the construction of three
aluminium smelters with total capacity of 2 mn tonnes per annum is
illegal and should be suspended immediately. Other projects and
capacities are potentially under risk of termination.
- In addition, a significant aluminium
cost push in China by more than 40% in 1Q17 and continued cost
pressure mainly in carbon raw materials prices brought in a
significant impact on high cost non-integrated Chinese smelters
operating on thin margins or losses.
KEY OPERATING DATA
GROUP PRODUCTION DATA8
(‘000 tonnes) 1Q17 4Q16 Change, % (QoQ) 1Q16 Change, % (YoY)
Aluminiumutilisation rate
910
95%
930
95%
-2.1% 916
95%
-0.6%
Aluminium foiland packagingproducts
23.1 22.5 2.8% 18.8 22.9% Alumina 1,889 1,939 -2.6% 1,873
0.4% Bauxite 2,869 2,841 1.0% 3,009 -4.6% Nepheline 1,056
978 7.9% 1,111 -5.0%
GROUP SALES DATA
(‘000 tonnes) 1Q17 4Q16 Change, % (QoQ) 1Q16 Change, % (YoY)
Aluminium salesincluding
985 922 6.8% 957 2.9%
BOAZ aluminiumproduct sales
33 31 6.0% 38 -14.2%
other third partyaluminiumproducts
sales
46 39 18.5% 5 VAP sales
(included in thetotal aluminiumsales)
436 405 7.7% 390 11.7%
Realized price,USD/ton
1,949 1,799 8.3% 1,666 17.0%
ALUMINIUM PRODUCTION
(‘000 tonnes) Interest 1Q17 4Q16
Change, %(QoQ)
1Q16
Change, %(YoY)
Russia (Siberia)
Bratskaluminiumsmelter
100% 248 254 -2.2% 251 -1.1%
Krasnoyarskaluminiumsmelter
100% 253 257 -1.4% 256 -1.0%
Sayanogorskaluminiumsmelter
100% 131 135 -3.3% 130 0.3%
Novokuznetskaluminiumsmelter
100% 53 54 -1.1% 53 0.0%
Irkutskaluminiumsmelter
100% 103 105 -1.7% 103 0.3%
Khakasaluminiumsmelter
100% 72 74 -2.4% 73 -1.7%
Russia —Other
Nadvoitsyaluminiumsmelter
100% 3 3 -2.1% 3 -8.6%
Kandalakshaaluminiumsmelter
100% 18 18 -0.2% 17 5.2%
Sweden
KubikenborgAluminium(KUBAL)9
100% 30 31 -4.0% 30 -2.1%
Totalproduction
910 930 -2.1% 916 -0.6%
Remelting ofthird-partyprimaryaluminium
atVolgogradsmelter
6 9 -33.6% 12 -50.8%
Totalaluminiumproductsoutputincludingremelting10
916 939 -2.4% 928 -1.3%
Foil and packaging production results
(‘000 tonnes) Interest 1Q17 4Q16
Change, %(QoQ)
1Q16
Change, %(YoY)
Russia Sayanal 100% 9.0 9.2 -2.1% 6.9 31.0% Ural Foil
100% 5.9 5.3 11.8% 3.9 53.0% Sayana Foil 100% 0.8 1.1 -26.8% 0.8
-3.7%
Armenia Armenal 100% 7.4 6.9 7.2% 7.2 2.1%
Total production 23.1 22.5 2.8% 18.8 22.9%
Other aluminium products output and silicon output
(‘000 tonnes) 1Q17 4Q16 Change, % (QoQ) 1Q16 Change, % (YoY)
Secondary alloys 7.2 6.3 13.9% 5.6 29.2% Silicon 14.3 15.5
-7.6% 15.2 -6.2% Powder 4.6 4.3 9.2% 4.0 15.9%
ALUMINA PRODUCTION
(‘000 tonnes) Interest 1Q17 4Q16
Change, %(QoQ)
1Q16
Change, %(YoY)
Ireland
AughinishAlumina
100% 471 509 -7.5% 488 -3.4%
Jamaica Alpart11 100% —
— Windalco 100% 146 155 -6.0% 154 -5.0%
Ukraine
NikolaevAluminaRefinery
100% 397 407 -2.4% 370 7.4%
Italy Eurallumina 100% —
— —
Russia
BogoslovskAluminaRefinery
100% 234 250 -6.0% 235 -0.3%
AchinskAluminaRefinery
100% 243 214 13.5% 244 -0.4%
Urals AluminaRefinery
100% 209 205 2.1% 197 6.2%
BoxitogorskAluminaRefinery
100% — — —
Guinea
FriguiaAluminaRefinery
100% — — —
Australia (JV)
QueenslandAlumina Ltd(20%)
20% 187 198 -5.2% 184 -1.6%
Total aluminaproduction
1,889 1,939 -2.6% 1,873 0.9%
BAUXITE MINING
(‘000 tonnes wet) Interest 1Q17 4Q16
Change, %(QoQ)
1Q16
Change, %(YoY)
Jamaica Alpart 100% — — 44 Windalco 100% 503 510
-1.3% 488 3.1%
Russia North Urals 100% 589 607 -3.0%
551 7.0% Timan 100% 723 669 8.0% 683 5.7%
Guinea
Friguia 100% — — — Kindia 100% 771 805 -4.1% 925 -16.6%
Guyana
BauxiteCompany ofGuyana Inc
90% 283 250 13.2% 319 -11.1%
Total bauxiteproduction
2,869 2,841 1.0% 3,009 -4.6%
Nepheline ore production12
(‘000 tonneswet)
Interest 1Q17 4Q16
Change, %(QoQ)
1Q16
Change, %(YoY)
Kiya ShaltyrNephelineSyenite
100% 1,056 978 7.9% 1,111 -5.0%
JOINT VENTURE OPERATING RESULTS
1Q17 4Q16
Change, %(QoQ)
1Q16
Change, %(YoY)
BoguchanskayaHPP13
Electricitygeneration,mwh
50% 3,176 3,452 -8.0% 3,127 1.6%
Boguchanskyaluminiumsmelter14
Aluminiumproduction(´000
tonnes)
50% 37 37 -1.5% 38 -2.5%
BogatyrKomir andBogatyr
Trans
Coalproduction(50%) (Kt)
50% 5,071 6,023 -15.8% 4,465 13.6%
Transportationvolumes (50%)(Kt
oftransportation)
50% 1,571 1,663 -5.5% 1,516 3.6%
By order of the
Board of Directors ofUnited Company RUSAL Plc
Aby Wong Po
YingCompany Secretary
24 April 2017
As at the date of this announcement, the executive Directors are
Mr. Oleg Deripaska, Mr. Vladislav Soloviev and Mr. Siegfried Wolf,
the non-executive Directors are Mr. Maxim Sokov, Mr. Dmitry
Afanasiev, Mr. Ivan Glasenberg, Mr. Maksim Goldman, Ms. Gulzhan
Moldazhanova, Mr. Daniel Lesin Wolfe, Ms. Olga Mashkovskaya, Ms.
Ekaterina Nikitina and Mr. Marco Musetti, and the independent
non-executive Directors are Mr. Matthias Warnig (Chairman), Mr.
Philip Lader, Dr. Elsie Leung Oi-sie, Mr. Mark Garber, Mr. Dmitry
Vasiliev and Mr. Bernard Zonneveld.
All announcements and press releases published by the Company
are available on its website under the links
http://www.rusal.ru/en/investors/info.aspx,
http://rusal.ru/investors/info/moex/ and
http://www.rusal.ru/en/press-center/press-releases.aspx,
respectively.
1 Operating data is based on preliminary data and may be updated in
the 1Q17 financial results. 2 Aluminium production represented by
salable products output (the number includes all facilities
excluding Volgograd remelting). 3 VAP includes alloyed ingots,
slabs, billets. wire rod and high, super, medium purity aluminium.
The VAP sales for 1Q16 were updated as a result of addition of
high, super, medium purity aluminium volumes. 4 The realised price
includes three components: LME component, commodity premium and VAP
upcharge. 5 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 speciality. 6 Kiya Shaltyr
Nepheline ore is used as a feedstock for alumina production at
Achinsk alumina refinery. 7 Unless otherwise stated data for the
“Market overview” section is sourced from Bloomberg, CRU, CNIA, IAI
and Antaike. 8 Unless stated otherwise the production data
throughout the report is presented on equity-adjusted basis (for
exceptions please refer to the data of the Boguchansky smelter and
Boguchanskaya HPP). Production volumes are calculated based on the
pro rata share of the Company´s (and its subsidiaries´) ownership.
9 Does not include remelting of the metal from other UC RUSAL
smelters 10 Here and further “total production” may not be equal to
the arithmetic addition of the numbers above presented in the
table. The differences arise due to the rounding of exact numbers
(including decimals). 11 The Alpart was sold to an external party
(see UC RUSAL’s announcement dated 19 July 2016). The results of
Alpart are excluded from UC RUSAL Consolidated Financial 12
Nepheline ore used as a feedstock for alumina production at the
Achinsk alumina refinery. 13 Boguchanskaya HPP data is represented
by 100% of energy generated (not on an ownership pro rata basis).
14 Boguchansky aluminium smelter data is represented by 100% of
volumes produced (not on an ownership pro rata basis).
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version on businesswire.com: http://www.businesswire.com/news/home/20170423005048/en/
United Company RUSAL Plc