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The United States and the United Kingdom have banned its shipment to stock exchanges

Russian aluminum, copper and nickel are cut off from Western trading platforms. The United States and Great Britain have banned their supply to the warehouses of the London Metal Exchange and the Chicago Stock Exchange, as well as direct imports. Analysts expect that the sanctions will lead to logistical problems and, probably, to an increase in prices, while liquidity in metals may finally move to the Shanghai Stock Exchange.

The United States and Great Britain have imposed a ban on imports of Russian aluminum, copper and nickel, as well as on trading in these metals on their exchanges — the Chicago Mercantile Exchange (CME) and the London Metal Exchange (LME). The US Treasury explains that as a result, "metal exchanges such as the London Metal Exchange (LME) and Chicago Mercantile Exchange (CME) will be prohibited from accepting new shipments of aluminum, copper and nickel from Russia." The restrictions will apply to metals issued after April 13. At the same time, the Ministry of Finance admitted that in some cases the import of batches of aluminum, copper and nickel may be allowed as an exception.

The ban on the import of Russian metals to the United States fixes the established state of affairs.

According to the U.S. Census Bureau, in 2024, the country imported aluminum for only $105 thousand. In 2021, imports of copper amounted to $100 million, nickel — $158 million, aluminum — $612 million. Then, after the outbreak of hostilities in Ukraine, Russian imports began to decline, and the United States imposed 200 percent duties on imports of Russian aluminum. As a result, in 2023, aluminum supplies amounted to $44 million, nickel — $26 million, copper — $ 53 thousand.

At the same time, the United States continued to purchase Russian palladium and platinum in relatively large volumes from Norilsk Nickel, and the current sanctions do not apply to these metals. According to Norilsk Nickel's financial statements, its revenues from the sale of metals to North and South America amounted to 114 billion rubles in 2023, or 10% of the company's total revenue. According to the U.S. Census Bureau, Russia supplied $2 billion worth of palladium and platinum to the countries in 2023. Rusal and Norilsk Nickel declined to comment.

The sanctions may have the greatest impact on the exchange trading of non-ferrous metals on Western exchanges, in which Russian supplies played a key role.

Currently, 400 thousand tons of Russian metal out of 1 million tons of all reserves are stored in LME warehouses. The lion's share of Russian reserves is accounted for aluminum — 311 thousand tons, copper — 61 thousand tons, nickel — 25 thousand tons.

After the introduction of US sanctions, the LME admitted that their result would be uncertainty in the aluminum, copper and nickel markets. The exchange has issued recommendations according to which it will not accept metal from Russia issued after April 13 into stocks. US Treasury officials believe that this will lead to a discount on over-the-counter transactions with Russian metal. At the same time, the sanctions will reduce liquidity on the LME, which is already inferior to the Shanghai Stock Exchange in this component.

Currently, 400 thousand tons of Russian metal out of 1 million tons of all reserves are stored in LME warehouses. The lion's share of Russian reserves is accounted for aluminum — 311 thousand tons, copper — 61 thousand tons, nickel — 25 thousand tons.

After the introduction of US sanctions, the LME admitted that their result would be uncertainty in the aluminum, copper and nickel markets. The exchange has issued recommendations according to which it will not accept metal from Russia issued after April 13 into stocks. US Treasury officials believe that this will lead to a discount on over-the-counter transactions with Russian metal. At the same time, the sanctions will reduce liquidity on the LME, which is already inferior to the Shanghai Stock Exchange in this component.

The discussion of sanctions that would lead to a ban on trading in Russian metals on the LME has been going on for the last two years, but the site itself has tried in every possible way to avoid the introduction of such restrictions. So, in July 2023, the Norwegian aluminum producer Norsk Hydro proposed to the LME to reconsider the decision not to prohibit the storage of Russian aluminum in the warehouses of the exchange, since large volumes of metal of Russian origin allegedly jeopardize the reference status of its aluminum contract. The LME refused, noting that aluminum from the Russian Federation continues to be used by many market segments. In 2022, the American Alcoa advocated a ban.

The sanctions consolidate the already existing restrictions on the supply of Russian metals to the United States and Great Britain, comments Maxim Khudalov, chief strategist at Vector X investment company.

The LME called the trade in Russian copper undesirable from the middle of 2022, and even then aluminum supplies from Russia moved mainly to the Shanghai Stock Exchange, as market participants were afraid to trade Russian products due to potential sanctions.

According to the analyst, logistical failures are now possible due to the inability to supply metal to LME warehouses, but these volumes will be able to be attached through Asian traders. "In these negative news, the advantage may be that nickel and aluminum prices will rise. Perhaps this was the goal of the Americans to raise aluminum prices for Alcoa, which is suffocating from low prices," he believes. In 2023, Alcoa's capitalization fell by 47%.

Source: https://www.kommersant.ru/doc/6648427