Rusal Sees Record U.S. Aluminum Shipments Ahead on Buying Frenzy

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United Co. Rusal booked a record month for both U.S. and North American shipments in March, and the region’s top executive doesn’t expect the pace to ease up due to soaring demand for the industrial metal.

The America division of world’s second-largest aluminum producer delivered more than 25,000 metric tons of aluminum in its best-ever month for North American shipments, according to Rusal America Chief Executive Officer Brian Hesse. He sees similar monthly numbers for the rest of the year, to reach an annual record for the region.

“We’re coming off of Covid and I don’t think people expected things to be nearly as robust,” Hesse said Thursday in a phone interview. “We planned for that and we went out and got additional customers, so those same people are now out in the marketplace trying to pick up material frantically.”

Rusal’s upbeat outlook comes as global aluminum prices are off to their best start in four years and as regional premiums approach a record, indicating consumers’ growing need for the lightweight metal. The U.S. economic recovery is driving demand for a range of goods that require aluminum, including canned beer, window frames and recreational vehicles.

Trade-Offs

The surge in shipments comes with trade-offs. Shipping and freight costs are “through the roof,” Hesse said, especially for trucking, which has forced Rusal to lean more on rail and barge in the U.S. While ocean shipments are getting back to normal after the Suez Canal blockage, the executive said their vessels are averaging a week delay due to demand for all products -- regardless of whether it’s aluminum or other goods.

Rusal America’s customer base in March was 100% original equipment manufacturers, according to Hesse, marking a new shift. Before the U.S. government slapped sanctions on Rusal in 2018, most of the Moscow-based company’s business was to trading houses.

Hesse’s upbeat expectations are a turnabout from last year, when aluminum companies turned pessimistic during the height of the pandemic since they had difficulty knowing how long it would take to roll out a vaccine and for economies to rebound. Shortages now present other issues. Billet, a key form of the metal needed in the automotive and building industries, surged near a record earlier this year as consumers faced a lack of metal.

Alcoa Corp., one of the world’s largest producers, said last month that it’s seeing strong demand recovery across the world and inside China, the biggest consumer. The benchmark price on the London Metal Exchange is up 15% this year, the best start since 2017.

Some uncertainties still loom in the U.S. market. General Motors Co. said Thursday that it’s temporarily idling or extending shutdowns at several North America plants due to the ongoing semiconductor shortage. And the Biden administration still hasn’t decided what it will do with the national security tariffs on aluminum imports.

Despite these concerns, Hesse said they’ll be more than offset by overall demand as the economy picks up steam through the rest of the year.

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