HONG KONG/MOSCOW, Feb 8 (Reuters) – Russian aluminium giant Rusal expects demand for aluminium to grow in 2019 and sees potential for prices to rise, it said on Friday, sending its Hong Kong-listed shares up 12 percent to a 10-month high. Shares in Rusal, the world’s largest aluminium producer outside China, hit their highest since April when the United States imposed sanctions on the company and its co-owner Oleg Deripaska because of his ties to Russian President Vladimir Putin. After talks and several extensions of the deadline for sanctions to take full effect, Deripaska agreed to reduce his stake in Rusal via its parent company En+. Sanctions against Rusal and En+ were lifted in January. “The company was operating under the sanctions for the majority of 2018. These circumstances coupled with other factors … led to certain changes to ordinary levels of operational performance,” Rusal said in a statement. Its aluminium production rose 1.3 percent in 2018 to 3.75 million tonnes, while aluminium sales fell 7.2 percent to 3.67 million tonnes. The share of value added products (VAP) in total sales fell to 45 percent from 47 percent. These sales were significantly challenged by short extensions to the deadline for U.S. sanctions taking full effect in the last quarter of 2018, Rusal said. “The aluminium market is in heavy deficit and demand is set to improve, the aluminium price has upside potential,” Rusal said, adding that its 2018 average aluminium price rose by 7.3 percent to $2,259 per tonne. It said the aluminium market faced supply disruptions and soaring production costs, while about 50 percent of production facilities outside China and 60 percent in China were making a loss based on current London prices and average market premiums. Aluminium production outside China was flat at 27.6 million tonnes in 2018, but demand rose by 2.8 percent to 30 million tonnes thus retaining 2.4 million tonnes of deficit, Rusal said. It said further supply disruptions were possible, given most smelters outside China were making a loss.