In 2015, aluminum on the London Metal Exchange (LME) fell in price by 16.8% to $1,500 per 1 ton. Global demand for aluminum last year, according to the November forecast of UC Rusal , was expected to grow by 5% to 58 million tons. Domestic Aluminum consumption in Russia and the CIS fell, according to preliminary estimates, to approximately 1.5 million tons, a representative of UC Rusal noted. In mid-2015, UC Rusal Sales Director Roman Andryushin said that consumption in the same region in 2014 was 1.9 million tons, of which 900,000 tons of primary aluminum, 300,000 tons of secondary aluminum and 700,000 tons of imports. In all these segments, consumption has decreased, a representative of the aluminum company comments.

But UC Rusal has a plan to stimulate aluminum consumption in Russia (Vedomosti has a presentation of the special program). UC Rusal expects to increase aluminum consumption in Russia and the CIS to 2.2 million tons by 2020 (see chart; the company’s entire production for 2014 was 3.6 million tons; it may reduce another 200,000 tons in 2016. ). According to the presentation, the company proposes to focus on the automotive industry (will add 235,000 tons to consumption), construction (210,000 tons), transport (400,000 tons) and the cable industry (183,000 tons). R&D is carried out by the UC Rusal Engineering and Technical Center in Krasnoyarsk, it develops the alloy, sends a trial batch to the customer, receives feedback, refines the characteristics, etc., says a company representative. He did not disclose the costs of scientific research.

In particular, the company is participating in a program to create new alloys for the construction of multifunctional light aircraft, hybrid airships and the Aquaglide-30 ekranoplane. The partner in these projects is the Kamensk-Ural Metallurgical Plant (KUMZ, owned by Renova Group of Companies and one of the partners in Sual Partners, co-shareholder of UC Rusal). “We currently produce 120,000 tons of rolled aluminum per year, which is then used to make parts for mechanical engineering (a 1,500 mm wide mill operates),” says a KUMZ representative. “In April we plan to launch another 3,000 mm mill with a maximum rolling width of up to 4,500 mm (investment – $600 million). This complex will reach its design capacity in the second half of 2017 and will add an additional 160,000 tons per year to us. This rolled product will be supplied to machine-building enterprises, including for the MS-21 aircraft,” says Vedomosti’s source.

UC Rusal intends to stimulate the production of low-voltage wires and cables for the automotive industry (2000 tons per year). The company has already developed the raw materials for such wires, and Kamaz is conducting tests. A representative of the automobile company notes that “some aluminum parts are already used in our cars.” According to him, it is possible to increase their share in the car, but this will require additional investments in component production technology. A representative of the GAZ group (part of Oleg Deripaska's Basic Element) confirmed that tests of low-voltage wires and cables for the automotive industry are being carried out, he noted.

UC Rusal also proposes to produce aluminum railcars (forecast aluminum consumption is 70,000 tons per year). The service life of such cars is six years longer, they are 2–4.5 tons lighter, which increases their carrying capacity. Uralvagonzavod considered the possibility of building cars from aluminum, but opted for composite materials - they are falling in price faster than aluminum, said Andrey Shlensky, deputy general director for civil projects of the corporation. “We have calculated: an aluminum car allows us to load several tons of cargo, but this does not discourage the purchase and production of such a car. There are issues with repairs, the problem of connecting the car with the metal frame has not been resolved - corrosion occurs at the junction,” Shlensky lists the reasons.

With the falling price of oil, aluminum becomes more expensive in rubles and at the same time demand decreases, so it is unlikely that UC Rusal’s expectations from the market will come true, believes BCS analyst Kirill Chuiko. “It is clear that the domestic market needs to be nurtured; this may ultimately become the last haven for some metallurgists. However, if several aluminum airships are built in Russia, this will not ensure a stable significant increase in demand for the metal; now the main consumers of this metal are transport and the food industry (drinking containers),” says the expert.

UC Rusal’s attempts to popularize aluminum in the face of falling domestic and external demand are reminiscent of the history of the popularization of titanium, notes Raiffeisenbank analyst Irina Alizarovskaya. In the early 1990s. orders for titanium fell 30 times, former VSMPO CEO Vladislav Tetyukhin recalled in an interview with Forbes. Instead of tank rollers, they began making wheels for passenger cars. Shovels were made from titanium waste - they are light, and the earth does not stick to them. Another success is the pots, the equipment for the production of which was obtained from local entrepreneur Vyacheslav Bresht in Germany. “When we went to South America, I took five cans with me - I carried them and showed them to everyone. I thought they would be useful for farms, but the Brazilian Embraer became interested in us,” says Tetyukhin. And it worked: from 1996 to 2014, titanium production in the world doubled to 6.6 million tons, according to data from the US Geological Survey. And VSMPO-Avisma is now one of the largest suppliers of titanium alloys for global aircraft manufacturing enterprises.

Corrected version. The original published version can be viewed in the Vedomosti archive (smart version)

UC Rusal seeks to increase aluminum sales