Page 206 - RusRPTMay21

expectations on inventory accumulation and the time lag to the LME aluminium spot price. Aluminium and alumina production, however, were broadly in line with expectations.
Aluminium prices have been rallying strongly since commodity prices began to pick again at the end of last year as the end of the pandemic came in sight and with a price of $2,370 at the end of last week they are current up 20% YTD.
“Due to the favourable market conditions, the share of value added products in sales increased to 49%, matching our expectations and staying in line with company's strategy. We reiterate our Buy recommendation for UC Rusal, based on our unchanged 12-month target price of HKD6.80 that suggests a 26% upside,” VTB Capital (VTBC) said in a note.
Aluminium production declined 1% y/y in 1Q21 and alumina output also was close to forecasts, while bauxite output was 7% below expectations due to lower production at the company’s Russian assets.
Aluminium sales were 4% below VTBC’s expectations due to an increase in inventories, however, sales still grew 5.3% y/y.
“The share of value added products in company’s sales – on the back of favourable aluminium market environment increased to 49% vs. the 42% average level in first quarters, 47% in 4Q20 and 46% in 1Q20, matching our expectations and staying in line with Rusal’s strategy to increase the share of value added products,” VTBC added. “We expect the accumulated inventories to be sold in 2Q21, which, in our view, means that company remains on track for robust 1H21 earnings.”
CEO of UC Rusal Evgeny Nikitin gave an interview to TASS at the start of April. The key takeaways from the interview are given below.
The company sees all the key sectors of aluminium demand continuing to recover, and expects that to continue in 2021, which would result in a deficit on the aluminium market in 2021.
The company spent a significant amount of cash, partially including dividends from Norilsk Nickel, on investment programmes, and expects dividends payment from Norilsk Nickel to continue (Nikitin did not mention for which period). Rusal is not likely to pay dividends for 2020.
The construction of the Taishet smelter continues in line with the plan.
206 RUSSIA Country Report May 2021 www.intellinews.com