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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)
THIRD 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 third
quarter (“3Q17”) 20171 Aluminium
- Aluminium production2 in 3Q17 totaled
931 thousand tonnes (+1.1% QoQ), with Siberian smelters
representing 94% of total aluminium output. The total production
dynamics remained largely stable with capacity utilization rate
standing at 95%;
- In 3Q17, aluminium sales decreased
(-3.4% QoQ) totaling 968 thousand tonnes. The QoQ decline in
aluminium sales dynamics is largely explained by increase of goods
in transit due to ports/vessels availability (volumes to be
realized in the next period);
- In 3Q17 sales of value added products
(VAP3) stood at 479 thousand tonnes. The Company as per its
strategy continued to grow the VAP’s share in total sales, which
now stands at 50% in comparison with 49% in 2Q17 sales;
- In 3Q17 the average aluminium realized
price4 increased by 2.1 % QoQ to USD2,124/t due to positive
dynamics in London Metal Exchange (“LME”) QP5 component
(+2.9% QoQ to USD1,962/t). The average realized premium component
declined (-7.0% QoQ to USD162/t) due to seasonal (summer time)
market indicators decrease (WH Rotterdam, CIF MJP, Mid West).
Alumina
- In 3Q17, total alumina production
increased by 1.9% QoQ, totaling 1,965 thousand tonnes.
- The continuation of capacities ramp up
at Russia-based refineries post completion of upgrades earlier in
2017 coupled with growing production at Aughinish refinery on
improved quality of purchased bauxites were largely behind the QoQ
production increase for the Company overall, while Nikolaev
refinery output was -3.5% down QoQ on the back of scheduled
maintenance works.
Bauxite and nepheline ore
- In 3Q17, Nepheline output was stable,
marginally growing by 1.2% QoQ to 1,125 thousand tonnes, while
consolidated bauxites output decreased by -11.3%, totaling 2,742
thousand tonnes. The Company covered alumina refineries consumption
needs in relevant feedstock using the available inventory at its
operations at Achinsk, Bogoslovsk, Urals and Windalco operations
and additional purchased bauxite elsewhere.
- Production volumes at Timan decreased
by -5.5% QoQ to totaling 839 thousand tonnes and Kindia production
volumes decreased by -11.0% QoQ to 717 thousand tonnes due to
scheduled operational equipment care and maintenance works.
- Abnormal weather conditions affected
operational performance of Bauxite Company of Guyana production,
which decreased to 161 thousand tonnes (-41.6% QoQ) and Windalco
production which decreased to 476 thousand tonnes (-5.5% QoQ).
- North Urals bauxite production declined
by -11.0% QoQ to 548 thousand tonnes to match the needs of Urals
alumina refinery where as part of working capital management, the
feed from accumulated inventory was prioritized during the
quarter.
Market overview6
- The LME aluminium price fluctuated
around USD1,900/t during March — July 2017, but then jumped to
above USD2,100/t in August and reached USD2,164/t in September
2017, its highest level since December 2012. Price growth is
attributed to market expectations of widespread capacity shutdowns
during winter in China, the robust demand for aluminium during the
period, coupled with significant production cost inflation.
- The world economy witnessed broad based
growth in 9M2017, with an increase in business activity,
particularly in the developed economies. The main drivers for
demand for aluminium were the growth of consumer spending
particularly for cars and durable goods sales and also fixed asset
investments.
- In August-September, the JP Morgan
Global Manufacturing PMI reached 53.2, a six-year high. Current
multi-year high growth rates, particularly in the U.S. and Europe,
continue to suggest underlying strong demand, which supports LME
prices.
- The Chinese economy continued to show
strong growth through 9M2017. The official PMI reached 52.4 in
September 2017, its highest since April 2012, and the Caixin
Manufacturing PMI stood at a 51.0 level in September. GDP grew by
6.8% in 3Q17 Y-Y after 6.9% growth in 2Q17.
- The reported inventories of aluminium
in the World ex China declined further to 3.0 Mt at the end of
September 2017, down 985 kt from the inventories level at the end
of 2016. The days of consumption continued to decline at a steady
rate during 9M2017 and fell to 36 days at the end of September 2017
as compared to 58 days at the end of 2016.
- UC RUSAL estimates that global
aluminium demand grew by 5.9% year-on-year in the 9 months of 2017
to 47.8 million tonnes as a result of strong demand in China,
Europe, Asia ex-China, North America and India. Robust demand
growth left the global aluminum market balance in a deficit of 0.8
million tonnes.
- Based on CRU estimates, global
aluminium demand ex-China rose by a strong 3.9% in 9M2017
year-on-year to 22.1 million tonnes while production (estimate
based on IAI data plus CRU’s estimate for production of eight
non-reporting countries) increased by 0.9% year-on-year to 20.3
million tonnes. This left the rest of the world aluminium market
with approximately 1.8 million tonnes in deficit in 9M2017.
- Demand for aluminum in China in 9M2017
grew by 7.7% to 25.7 million tonnes compared to the same period of
last year.
- The announcement by the Chinese
regulator regarding winter capacity cuts, which is now underway in
several provinces, was implemented to curb industrial pollution. As
expected, winter smelting cuts will result in an annualized
production loss of around 1 million tonnes and alumina around 3.3
million tonnes of alumina, according to UC Rusal estimates. Deeper
losses may take place in carbon materials supply including anodes,
coking coal etc., due to 100% closures in 26+2 cities during the
winter season.
- When considering the expected
curtailments of the so-called “illegal capacities” on top of winter
cuts, UC Rusal expects that during the winter season, the Chinese
aluminium market balance may become very tight. As of the date of
this announcement, according to SMM, around 4.2 million tonnes of
illegal operating capacity have been closed.
- As expected Chinese semis exports are
expected to drop in 4Q17- 1H18 due to the tight domestic market and
negative export arbitrage. Thus, China’s exports of aluminum semis
fell 7.6% M-M (adjusted by a number of days in the months) to 358
kt in August 2017 and for second month in a row, fake extrusions
exports dropped 31% YoY during 8M2017.
Net Debt
- As part of commitment to continuous
deleveraging, UC RUSAL has directed part of its strong 3Q17 cash
flow to repayment of debt facilities and accumulated significant
cash balance for further debt reduction.
- According to management accounts, the
management of the Group expects the net debt of the Group as at 30
September 2017 to be below US$7.7 billion, subject to update by the
Company upon issue of the reviewed quarterly financial information
as at and for the three and nine months ended 30 September
2017.
KEY OPERATING DATA
GROUP PRODUCTION DATA7
(‘000 tonnes) 3Q17
2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Aluminium 931 921 1.1% 2,763 2,756 0.3% utilisation rate 95%
95% 95% 95% Aluminium foil and packaging products 25.5 26.0 -2.0%
74.7 62.2 20.07% Alumina 1,965 1,928 1.9% 5,783 5,588 3.50% Bauxite
2,742 3,090 -11.3% 8,701 9,346 -6.9% Nepheline 1,125 1,111 1.2%
3,291 3,454 -4.7%
GROUP SALES DATA
(‘000 tonnes) 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Aluminium sales 968 1,002 -3.4% 2,955 2,896 2.0% incl BOAZ
aluminium product sales 37 37 0.0% 108 109 -0.9% other third party
aluminium products sales 42 40 5.0% 127 50 154.0% Realized
price, US$/tonne 2,124 2,081 2.1% 2,051 1,711 19.9% LME QP
component 1,962 1,907 2.9% 1,888 1,550 21.8% Realised premium 162
174 -7.0% 163 161 1.2% VAP sales in tonnes 479 493 -2.8%
1,407 1,277 9.2% Share of VAP 50% 49% 1.3% 48% 44% 9.9%
ALUMINIUM PRODUCTION
(‘000 tonnes)
Interest 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Russia (Siberia) Bratsk aluminium smelter 100% 254
251 1.1% 753 752 0.1% Krasnoyarsk aluminium smelter 100% 255 253
0.6% 761 768 -0.8% Sayanogorsk aluminium smelter 100% 134 134 0.0%
398 395 0.8% Novokuznetsk aluminium smelter 100% 54 54 1.1% 161 159
0.9% Irkutsk aluminium smelter 100% 105 104 0.8% 313 310 0.7%
Khakas aluminium smelter 100% 73 73 0.6% 218 219 -0.5%
Russia — Other Volgograd aluminium smelter 100% 4 1 717.3% 5
— Nadvoitsy aluminium smelter 100% 3 3 1.5% 9 9 -3.7% Kandalaksha
aluminium smelter 100% 18 18 0.5% 54 51 5.7%
Sweden
Kubikenborg Aluminium (KUBAL) 100% 31 31 -1.0% 92 93 -1.2%
Total production 931 921 1.1% 2,763 2,756 0.3%
Remelting of third-party primaryaluminium
at Volgograd smelter
6 6 -6.8% 18 30 -39.4%
Total aluminium products outputincluding
remelting
937 927 1.1% 2,781 2,785 0.2%
Foil and packaging production results
(‘000 tonnes)
Interest 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Russia Sayanal 100% 9.7 10.1 -4.3% 28.8 25.2 14.6%
Ural Foil 100% 6.3 6.2 0.7% 18.4 12.5 47.4% Sayana Foil 100% 1.0
0.8 14.7% 2.6 2.4 8.2%
Armenia Armenal 100% 8.6 8.9
-2.9% 24.8 22.1 12.1% Total production 25.5 26.0 -2.0% 74.7
62.2 20.1%
Other aluminium products output and silicon output
(‘000 tonnes) 3Q17 2Q17
Change,%(QoQ)
9М17 9М16
Change9M, %(YoY)
Secondary alloys 7.2 6.6 8.5% 2.0 18.7 11.9% Silicon 14.1
12.3 14.5% 40.6 43.8 -7.3% Powder 5.0 5.0 -1.5% 14.6 14.4 1.3%
ALUMINA PRODUCTION
(‘000 tonnes)
Interest 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Ireland Aughinish Alumina 100% 497 480 3.6% 1,448
1,458 -0.7%
Jamaica Alpart 100% — — — — Windalco 100%
149 134 11.3% 429 453 -5.4%
Ukraine Nikolaev Alumina
Refinery 100% 416 431 -3.5% 1,244 1,103 12.8%
Italy
Eurallumina 100% — — — —
Russia Bogoslovsk Alumina
Refinery 100% 252 238 5.7% 725 712 1.8% Achinsk Alumina Refinery
100% 234 230 1.8% 707 702 0.7% Urals Alumina Refinery 100% 230 227
1.2% 667 598 11.4% Boxitogorsk Alumina Refinery 100% — — — —
Guinea Friguia Alumina Refinery 100% — — — —
Australia (JV) Queensland Alumina Ltd 20% 187 189 -0.9% 563
562 0.2% Total alumina production 1,965 1,928 1.9% 5,783
5,588 3.5%
BAUXITE MINING
(‘000 tonnes)
Interest 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Jamaica Alpart 100% — — — 69 -100% Windalco 100% 476
504 -5.5% 1,483 1,544 -3.9%
Russia North Urals 100%
548 616 -11.0% 1,753 1,760 0.4% Timan 100% 839 887 -5.5% 2,449
2,396 2.2%
Guinea Friguia 100% — — — — Kindia 100%
717 806 -11.0% 2,295 2,733 -16.0%
Guyana Bauxite
Company of Guyana Inc. 90% 161 276 -41.6% 721 844 -14.5%
Total bauxite production 2,742 3,090 -11.3% 8,701 9,346 -6.9%
Nepheline ore production8
(‘000 tonnes wet)
Interest 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change9M, %(YoY)
Kiya Shaltyr Nepheline Syenite 100% 1,125 1,111 1.2% 3,291
3,454 -4.7%
JOINT VENTURE OPERATING RESULTS
(‘000 tonnes wet)
Interest 3Q17 2Q17
Change,%(QoQ)
9M17 9M16
Change,%(YoY)
Boguchanskaya HP Electricity generation, mwh 50%
3,716 3,572 4.0% 10,463 10,517 -0.5%
Boguchanskiy
aluminium smelter Aluminium production (´000 tons) 50% 37 37
1.2% 111 112 -0.9%
Bogatyr Komir and Bogatyr Trans
Coal production (50%) (Kt) 50% 5,212 4,114 26.6% 14,397 11,502
25.1% Transportation volumes (50%) (Kt of transportation) 50% 1,499
1,458 2.8% 4,524 4,573 -1.1% By order of the Board of
Directors of
United Company RUSAL PlcAby Wong
Po Ying
Company Secretary
23 October 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 and 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 3Q17 financial results. 2 Aluminium production
represented by salable products output (the number includes all
facilities excluding Volgograd remelting). 3 VAP include alloyed
ingots, slabs, billets, wire rod, high and special purity
aluminium. 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 Unless otherwise stated data for the “Market
overview” section is sourced from Bloomberg, CRU, CNIA, IAI and
Antaike. 7 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.
8 Nepheline ore used as a feedstock for alumina production at the
Achinsk alumina refinery.
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version on businesswire.com: http://www.businesswire.com/news/home/20171022005065/en/
United Company RUSAL Plc