Aluminium market braces for turmoil

The US is considering sanctions on imports of the crucial metal from Russia

Aluminum market braces for turmoil

The global metals market has been weighing potential supply disruptions following news that US government is considering a ban on Russian aluminum. Prices have been in a disarray amid growing uncertainty.

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

“It’s been very disappointing for the poor aluminum market to see kind of a double whammy from weakening global demand, in China in particular, but also Russia dumping aluminum on the global market,” Wolfe Research mining and metal analyst Timna Tanners told CNBC on Thursday. “So definitely this quarter reflected those challenges.”

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

Last week, media reported that the White House was mulling an effective ban on Russian imports of the metal used in transport and construction. The reports indicated that Washington was eyeing three options, which could include an outright ban, increasing tariffs to levels so punitive they would impose an effective ban, or sanctioning Russian company Rusal, which produces the metal.

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

Russia is the world’s second-largest producer of aluminum after China. Data cited by Bloomberg shows that in the US alone Russian supplies traditionally account for some 10% of total aluminum imports. The country was the third-largest aluminum exporter to the US in August.

CBA mining and energy commodities analyst Vivek Dhar explained to CNBC that, while the LME does not publish where aluminum is sourced when inventories rise, a surge in global stockpiles is a bad sign given that base metal prices have already been hit by recessionary concerns. Any influx of Russian aluminum into LME warehouses would also pose a more complex problem, Dhar noted.

Washington’s sanctions against Rusal could also have ramifications for global aluminum supply chains, according to ING economics commodities strategist Ewa Manthey. The Russian company is not only a major producer of primary aluminum, but it is also embedded in global supply chains of bauxite and alumina, which are needed to make the metal, she said.



One Response to “Aluminium market braces for turmoil”

  1. ian says:

    China has certainly improved beyond recognition in engineering during the last 30 years or so. I replaced a cylinder on a pre electronic chainsaw two years ago. Not exactly my strong point, but I was a time served motor mechanic in the 60s and 70’s. A proper one ie Jonsered, but I got a Chinese one online for £24, the real one, if available was £200. The saw has been good since, though they only work when we get a load of wood.
    Around 30 years ago, for a spell of about a year, I was a rep for a builder’s merchant. I was with them 12 years, but only a rep for a year. I had a box of Chinese tape measures that I couldn’t give away, they were so crap. Chinese screwdrivers regularly broke, but we’d tons, we gave them away. Now however as I mentioned with the chainsaw, the stuff seems ok.

    Regarding the rep job. I went off work with stress as we were given targets that were unobtainable and My nature drove me to try. Anyway, the big boss, an absolute nutcase, sent me a very provocative letter. Me being me handled the situation beautifully in a gang warfare kind of way, but not so good in a need my job kind of way, and was downgraded to shop manager. I then repeated the process, and eventually got downgraded to the dole.

    A little story about those times. I had a company car as a rep, and one Friday a month, we had to go to a meeting at Newcastle, (uponTyne). I always followed the same route in, as it was in the City Centre, and I don’t like driving in city traffic unless I know where I’m going. So this day there’s an accident, I get diverted and I get lost. Mr Hutchinsin, the Big Boss, is a Fkn nutter, and makes naughty reps stand in the corner like dunces. In my case a prison sentence might ensue, so I desperately tried to get there on time. In doing so, I spied the road I needed, down a no vehicle access play street and over some grass, and went for it. NB not one child was harmed in the making of that manoeuvre. A two tone police siren broke the silence and I got pulled up. A police woman was driving, she looked like Vera the TV cop. She put her cop hat on and did the silly cop walk round my car. “Is this your car sir?”, she asked. I said no it was a company car. I knew not to be a smart ass, and explained to the lady my exact situation, and my Big Bosses’ arseholeness, and the fact that I had the Samaritans on speed dial on my phone. She told me to stop licking her feet. She stopped the traffic on the main road, and drying her feet, waved me out with warnings not to try it again. The rest of the day went to painful plan.