The London Metal Exchange (LME) is preparing to start debating prohibiting new deliveries of Russian metals such as aluminum, nickel, and copper so that its warehouses could be used to offload difficult-to-sell stock, according to reports quoting sources with knowledge of the matter.
Since Russia invaded Ukraine, Western countries have imposed a slew of sanctions on Russian banks and individuals that were aignificantly wealthy and were linked to President Vladimir Putin. However, currently there are no sanctions imposed on purchasing Russian metal.
According to the sources, there was some concern that Russian aluminum producer Rusal would be unable to sell its metal and would instead deliver it to the 145-year-old metal exchange’s registered warehouses.
“The discussions are about the possibility of banning new deliveries,” one of the sources said, adding that trying to ban metal already in LME warehouses that had been produced by Rusal “would be madness”.
According to reports, the LME could not prohibit Russian metal without sanctioning the businesses that manufactured it.
Benchmark aluminium prices on the LME, the world’s biggest market for industrial metals, jumped 8.5 per cent to $2,305 a tonne on Thursday while nickel gained 6 per cent to $23,115.
The LME stated that its priority was to maintain an orderly market for the benefit of all market participants, and that it was constantly monitoring the situation.
“Although we do not currently see any evidence of LME warehouses being used to offload metal on a long term basis,” the exchange added, in response to a request for comment.
The LME added that metal movement has been relatively consistent over the last 12 months.
Last year, 920,000 tonnes of refined copper was produced by Russia, which accounted for about 3.5 per cent of the world’s total, according to the U.S. Geophysical Survey.
Nornickel is the main producer of nickel in Russia, accounting for 7% of global mined production last year, estimated at 2.7 million tonnes.
Rusal, the world’s largest aluminum producer outside of China, accounts for 6% of global supplies, which are expected to be around 70 million tonnes this year.
There were no comments from Rusal and Nornickel.
Some purchasers are avoiding Rusal’s aluminum, while others are obtaining price breaks.
(Adapted from EuroNews.com)