Rusal · RUS:RUAL
Rusal — 18th CRU World Aluminium Conference 2013
11 slides from Rusal's conference presentation, May 15, 2013
Slide 1: New industry trends and focus on production optimization
New industry trends and focus on production optimization Oleg Mukhamedshin, Deputy CEO 18th CRU World Aluminium Conference 2013 May 2013, London
Slide 2: 2008 crisis in the global aluminium industry is not fully resolved due to high inventories
2008 crisis in the global aluminium industry is not fully resolved due to high inventories… Supply/demand balance has deteriorated significantly …turning into rising aluminium stocks Kt Kt 2400 EU Debt Crisis 12000 Global Financial 2200 10000 Crisis +120% 2000 8000 1800 6000 1600 4000 1400 2000 1200
Slide 3: Putting pressure on prices and producers' profitability
…putting pressure on prices and producers’ profitability… The metal price is well below the pre-crisis level… …while production costs have risen significantly US$/t US$/t 3500 3 500 Unprofitable production LME+premium: 18%- 20%(1) -43% Unprofitable production 3000 3 000 LME: 49%(1) 2500 2 500 LME +
Slide 4: And driving industry restructuring
…and driving industry restructuring Production cuts support the price Production cuts in 2012 & 2013 US$/t Kt 3 500 95% 15% 7% 6% 51% 8% 3 000 90% 2 500 85% 460 2 000 80% 1 500 75% 377 300 215 231 224 180 1 000 70% (1) Alcoa RUSAL Rio Tinto Klesch Norsk Hydro Others LME cash Cash Cost Capacity utili
Slide 5: China is well-balanced in aluminium though a large part of the demand is met with loss-making production
China is well-balanced in aluminium though a large part of the demand is met with loss-making production China’s rapid consumption growth is backed by a …even though around one third of the production is corresponding production increase… below the water… Mt Mt RMB/t 30 5 4.5 25 4 20 3.5 3rd April S
Slide 6: Capacity transfer to North West China leads to higher transportation costs
Capacity transfer to North West China leads to higher transportation costs… Despite cheaper power costs NW producers face higher transportation costs and imported bauxite cost Bauxite is shipped ~ 3,000 km from Indonesia to Shandong ports Heilongjiang Alumina is transported by rail ~ 3,000 km fr
Slide 7: And raw material expenses due to strong dependence on imported bauxite
…and raw material expenses due to strong dependence on imported bauxite Bauxite reserves and production Bauxite supply balance Mt 120 80% 70% 100 60% 80 50% 60 40% 30% 40 Shanxi <0.5 Mt/year 20% 20 Henan < 1.0 Mt/year 10% <2.0 Mt/year 0 0% Guizhou 2.0+ Mt/year Guangxi Imported Domestic Self-sufficie
Slide 8: Security of bauxite supply – Indonesian bottle-neck
Security of bauxite supply – Indonesian bottle-neck China’s bauxite import by origin in 2012 China’s bauxite import dynamics China’s bauxite import prices* Indonesia is the largest bauxite exporter to China (71% of China’s total imports in 2012), followed by Australia (24%) and India (3%) In May
Slide 9: GCC countries ramping up production since 2009 but capacity growth is limited
GCC countries were actively ramping up production since 2009 but capacity growth is limited in the future Overview of GCC Aluminium production growth 2006-2012 mt (2.1%) (1.5%) 0.7% 1.2% 14.9% 13.5% The emergence of aluminium smelting across the Gulf, 25 21.9 driven by industrial policies and supp
Slide 10: Increasing financial influence on the LME price
Increasing financial influence on the LME price Financial demand is increasingly influencing the market… …and forming LME price sentiment Mt th. lots th. lots 60 40 1700 350 55 35 1600 34 31 1500 300 50 30 30 1400 45 25 23 250 1300 40 20 1200 35 15 200 47 1100 30 41 10 1000 150 34 25 5 900 25 20 0 8
Slide 11: Conclusion
Conclusion 1 Aluminium demand is set to grow at a healthy rate backed by key consuming industries 2 Without further capacity curtailments the crisis in the aluminium industry will only gain momentum The aluminium pricing mechanism on the LME needs transparency in order to better reflect 3 market fun