Russian aluminum producers warn of crisis

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An industry group expects the sector to be hit by a drop in prices, sanctions and Western import duties

Russia’s Aluminium Association has issued a grim warning for the industry as it faces Western sanctions, tariffs and a drop in prices for one of the world’s most widely used metals.

In its latest overview of the current state of the industry, the association has warned that the entire sector is on the verge of a serious crisis, adding that several enterprises of Russian aluminum giant Rusal are at risk of closure.

“A number of Rusal enterprises are already operating on the verge of zero or even negative profitability,” the association said on Monday, adding that further deterioration of the economic situation or an increase in the fiscal burden may lead to the need to shut them down.

It warned that the crisis could affect 5,000 jobs in the sector, while up to 30,000 jobs in related sectors may also be lost.

The union highlighted that aluminum prices had dropped to their lowest level since March 2021, while the US and EU markets have been almost entirely closed to Russian exporters.

According to the overview, processors from the EU have dramatically reduced their purchases of Russian aluminum due to political pressure from the US, which has slapped import taxes on supplies of the metal from Russia.

Meanwhile, Russian aluminum products could be included in the 12th package of Ukraine-related sanctions, which is currently being discussed by the EU.

Industry experts also said Russian producers currently have to import 60% of raw materials, while industry profitability had dropped to 13%. They warned that strategically important investments in the sector would inevitably cease, entailing negative social effects, especially in the cities of Siberia, where economies are highly dependent on aluminum production.

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