Europe decides whether or not to buy Russian aluminum

The energy crisis in Europe, production cuts and shortages of aluminum have put consumers in a difficult position regarding Russian supplies of a metal vital to the region's transport, construction and packaging industries.

Some prefer to avoid Rusal's metal, while others are more optimistic, pointing to the fact that neither the company nor its metal is under sanctions imposed on other Russian companies following Moscow's military actions in Ukraine in February.

This week, consumers and producers gathered at a conference in Barcelona, ​​known in the industry as mating season, to negotiate aluminum buying and selling deals for next year.

The organizers refused to accredit the Rusal team to the event without explanation, two sources familiar with the situation told Reuters. The Rusal team came to the city anyway, one of them added.

"Some people don't want Rusal's aluminum for moral reasons because of the war in Ukraine," an aluminum trader in Barcelona told Reuters.

“Others don’t care, because Rusal is still not under sanctions, although it milks it, begging for discounts.”

Some smaller companies in Europe, including Germany, have decided not to subscribe to Rusal's metal for next year, a trader told Reuters.

Some mid-sized companies have also decided to stop buying Russian aluminum from next year, Duncan Hobbs, an analyst at Concord Resources, told Reuters, without elaborating.

“We have hundreds of clients worldwide representing one of the strongest and most diverse client bases in the industry. Our business is not defined by the few who choose to buy aluminum elsewhere,” a Rusal spokesman told Reuters.

For some European consumers facing record high electricity prices, declining margins and power shortages in the regions, the discount on Rusal's metal is attractive. According to the trader, there is currently a discount on Russian aluminum in the amount of $100-150 per ton.

Aluminum production capacity in Europe is about 4.5 million tons. Of these, more than 1.1 million tons have been seized since 2021, with another 500,000 tons at risk, according to Citi analysts.

Companies with contracts for this year, signed in 2021, continue to buy aluminum from Rusal, the world's largest producer outside of China, which accounts for 6% of global shipments, estimated at about 70 million tonnes this year.

“There is a feeling that Russia wants to sell more aluminum than before,” one European consumer told Reuters in Barcelona, ​​adding that Rusal, fearful of sanctions, may be looking for cash flows.