Metals – US considers Russian aluminium ban
LME aluminium prices rallied yesterday, settling more than 3% up on the day. This came after reports that the US is considering a complete ban on Russian aluminium in response to Russia’s military escalation in Ukraine. According to a Bloomberg report, the Biden administration is considering three options: an outright ban, increasing tariffs to levels which would basically result in an effective ban or sanctioning Rusal. Russia is the world’s second-largest producer of aluminium after China and Russian supplies account for around 10% of total US aluminium imports.
The latest data from the International Lead and Zinc Study Group (ILZSG) shows the global zinc market remained almost balanced with a marginal supply deficit of 4kt in the first eight months of 2022, compared to a deficit of 49kt during the same period a year earlier. Total refined production fell 2.6% YoY to 8.97mt, largely due to lower output in Europe, while total consumption declined 3.1% YoY to 8.98mt in Jan-Aug’22. For lead, total production fell 1.9% YoY to 8.1mt, while consumption fell marginally by 0.5% YoY to 8.1mt in the first eight months of the year. The lead market reported a supply deficit of 25kt in Jan-Aug’22, compared to a surplus of 92kt during the same time last year.
Significant volumes of unwanted Russian-origin copper have been deposited in London Metal Exchange-approved warehouses in Germany, the Netherlands and Taiwan since the middle of September, according to a report from Reuters. LME data shows that since 15 September, copper stocks in LME warehouses in Rotterdam, Hamburg and Kaohsiung have climbed 225%, 153% and 26% respectively. LME copper stocks are up more than 40% since 15 September at 145,525 tonnes. But while inventories have increased from the lows earlier in the year (below 70kt over February/March), they remain at near historical lows, representing just two days’ worth of global supply. Russia produced 920,000 tonnes of refined copper last year, about 3.5% of the world's total, according to the U.S. Geological Survey, out of which Nornickel produced 406,841 tonnes. Asia and Europe are the main export markets for Russian copper. Although Russian copper is not officially sanctioned, self-sanctioning could already be disrupting trade dynamics in the European market. The LME launched a formal discussion paper on the possibility of banning new supplies of Russian materials, including aluminium, copper, and nickel. The LME also previously announced that it will restrict new deliveries of copper and zinc from Russia’s Ural Mining & Metallurgical Co. and one of its subsidiaries after the UK sanctioned its co-founder Iskandar Makhmudov.
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