Aluminium set for biggest winning streak on sanctions

LONDON: Aluminium is heading for its biggest winning streak since 1988 in the four days since the US slapped sanctions on United Co Rusal and as top exchanges said they will stop accepting metal from the Russian smelting giant.

The metal advanced 3% yesterday to US$2,266.50 a tonne by 11am on the London Metal Exchange (LME). That is up 13% since last Thursday, before the US announced sanctions.

Both the LME and CME Group Inc’s Comex have said they wouldn’t allow new deliveries of metal from Russian billionaire Oleg Deripaska’s Rusal, the biggest aluminium producer outside of China.

“I think there’s definitely potential for prices to pass recent peaks,” Helen Lau, an analyst at Argonaut Securities Asia Ltd, said from Hong Kong.

“Imagine how tight the world market is going to be if you lose a 10th of world supply, even for the short term. More and more companies are responding to the sanctions.”

After declining through most of this year, aluminium is heading back toward its peak of US$2,290.50 a tonne reached last December, a more than five-year high.

While Rusal’s stock has been hammered in Hong Kong, the rally in aluminium prices has fuelled gains in the shares of rivals worldwide. The block on Russian supplies adds to earlier import tariffs imposed by the US to benefit American producers most.

Alcoa Corp, the largest US producer, has climbed 14% since the close last Thursday, before the sanctions announcement. Rusal shares have dropped more than 50% this week.

The LME introduced a temporary suspension on placing Rusal metal on warrant with effect from April 17 unless the owner demonstrated it wouldn’t breach sanctions, the bourse said. — Bloomberg