Aluminum market braces for turmoil over possible Russian ban – RT Business News

The global metals market weighed potential supply disruptions following news that the Biden administration was considering a ban on Russian aluminum. Prices were disorderly amid growing uncertainty.

According to experts, unsold metal tends to end up in the London Metal Exchange (LME) warehousing system, which are warehouses licensed by the exchange to store LME-registered metal.

“It has been very disappointing for the poor aluminum market to see a sort of double whammy of weakening global demand, particularly in China, but also from Russia dumping aluminum on the global market », Wolfe Research mining and metals analyst Timna Tanners told CNBC on Thursday. « So this quarter certainly reflected those challenges. »

The next quarter could also be affected unless action is taken to stop potential dumping of Russian-origin metal and an increase in Chinese demand, both in infrastructure development and property construction, Tanners warned. .

Last week, media reported that the White House was considering an effective ban on Russian imports of metal used in transportation and construction. Reports said Washington was considering three options, which could include an outright ban, raising tariffs to levels so punitive they would impose an effective ban, or sanctioning the Russian company Rusal, which produces the metal.

Industry experts have warned that such a move could destabilize metals markets around the world. The aluminum embargo, which is crucial for most heavy industries, could potentially force consumers in the United States and other countries to rush to find replacement metal.

Russia is the world’s second largest aluminum producer after China. Data cited by Bloomberg shows that in the United States alone, Russian supplies have traditionally accounted for around 10% of total aluminum imports. The country was the third largest exporter of aluminum to the United States in August.

CBA mining and energy commodities analyst Vivek Dhar told CNBC that while the LME does not publish where aluminum comes from when inventories rise, an increase in global inventories is a bad sign being given that base metal prices have already been hit by recession fears. Any influx of Russian aluminum into LME warehouses would also pose a more complex problem, Dhar noted.

Washington’s sanctions on Rusal could also have ramifications for global aluminum supply chains, according to Ewa Manthey, economic commodities strategist at ING. The Russian company is not only a major producer of primary aluminum, but is also integrated into the global supply chains of bauxite and alumina, needed to make the metal, she said.

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