Singapore 25/08/2016 - UC Rusal’s adjusted net profit fell 78.6 percent year-on-year to $40 million in April-June on weak aluminium prices, the Russian aluminium producer said on Thursday.
The aluminium industry remained under strong pressure as the weak commodity environment continued, Vladislav Soloviev, CEO of Rusal, said in a statement.
“Looking forward to the second half of the year, we believe that the aluminium industry will remain under pressure,” he continued.
Rusal's first half adjusted net profit totalled $67 million in January-June, down 84.6 percent from the same period last year.
The company’s recurring net profit, which includes its interest in Norilsk Nickel, slipped 24 percent year-on-year to $276 million during the second quarter. The first-half figure was at $425 million, half of what it was the same period last year.
Rusal said it has focused on keeping costs under control which has helped to provide an effective counterbalance to weaker LME aluminium prices and premiums. Its cash cost was at $1,330 per tonne in the aluminium segment in the first half, which was a ten percent decrease compared to $1,484 per tonne in the first half last year.
Rusal forecasts that global aluminium demand will increase by 5.4 percent to 59.5 million tonnes in 2016, driven by ex-China growth of 3.5 percent to 28.5 million tonnes and Chinese growth of 7.2 percent to 31.0 million tonnes.
This differed slightly from its forecast in May where it had expected global aluminium demand growing 5.3 percent to 59.6 million tonnes this year, where ex-China production will be at 26.2 million tonnes.
The company estimates that the global aluminium market will show a deficit of around one million tonnes in 2016 as a result of strong aluminum demand growth, incremental increase in the global aluminium supply and falling Chinese aluminium semis exports - the forecast also differs slightly from the 1.2-million-tonne deficit it projected in May.
In the first half of this year, Chinese installed aluminium capacity rose by only 1.5 million tonnes per year to 40.1 million tonnes - around 1.8 million tonnes per year of operating capacity was commissioned and about one million tonnes per year of capacity was resumed for the same period, Rusal estimated.
Chinese private sector projects had faced high funding costs and lower return on investments, it noted.
Rusal’s aluminium production in the second quarter of the year was flat at 919,000 tonnes compared with the previous quarter. This took output to 1.835 million tonnes of aluminium in the first half, up 1.2 percent year-on-year.
In 2015, Rusal accounted for approximately 7 percent of global production of aluminium.