SHANGHAI, Mar 1 (SMM) – Rusal announced that it had to temporarily shut down production at the Nikolaev alumina refinery in the Nikolaev region of Ukraine due to unavoidable logistics and transportation congestion in and around the Black Sea.

While alumina production at the site will be severely curtailed in the short term, there will not be an immediate wider impact on aluminium production at the Group's other aluminium smelters.

It is reported that the Nikolaev alumina refinery is owned by Rusal and is Rusal's second largest alumina refinery with a production capacity of 1.7 million mt/year. It basically produced at full capacity in 2019, with the output in four quarters standing at 423,000 mt, 410,000 mt, 414,000 mt, and 443,000 mt respectively. It’s output in 2019 accounted for 21.5% of Rusal’s total alumina output in the year, and converted into 850,000 mt of primary aluminium output (accounting for 22.5% of total primary aluminium output).

Also according to the media, Rusal may transfer the alumina output from its refinery in Ireland - Aughinish - and supply it to its smelters in Russia. The Aughinish refinery usually supplies alumina to aluminium smelters in Europe and any diversion of shipment would reduce supply to the European market, which is already in short supply.

Although the United States previously indicated that it would not impose sanctions on Rusal, but with the changing situation in Russia and Ukraine that brought more sanctions against Russia from Europe, the United States and the United Kingdom and other Western countries, the market is concerned that is that if Rusal is unable to trade due to such sanctions, Rusal's overseas alumina production will all be affected, potentially resulting in repeated mistakes of 2018, when the United States imposed sanctions on Rusal in April 2018 and lifted them in early 2019.

Cuts in alumina supply mean less aluminium available for use in the transport, packaging and construction industries. Shortages are expected in the aluminium market this year and next.