US sanctions on Rusal lift aluminum to four-week high; other base metals climb

LONDON — Aluminum prices soared on Monday to their highest in more than four weeks after the United States imposed sanctions on Russian company Rusal, one of the world’s largest producers.

Benchmark aluminum on the London Metal Exchange (LME) ended up 4.7% at $2,139 a ton from an earlier $ 2,144, its highest since March 7 and its largest one day gain since Nov. 2011. It is up around 7% since the sanctions were announced on Friday.

“This is a further hit to Russian aluminum exports to the US. They come after the tariffs ( US President Donald) Trump introduced in March,” Julius Baer analyst Carsten Menke said.

“There is uncertainty about how this might affect other countries which are using Russianproduced aluminum.”

Washington imposed sanctions on seven Russian oligarchs, including Rusal’s former president Oleg Deripaska, 12 companies they own or control, as well as 17 senior Russian government officials.

The United States last month imposed a 10% levy on aluminium imports. Some countries including Canada have been exempted, but Russia is not exempt.

Rusal produced 3.7 million tons of aluminum last year, which according to brokers Argonaut is about seven percent of the world total. Rusal says exports to the US account for over 10% of its output.

“Rusal may find it more difficult to do business given that it is the second-largest supplier of aluminum to the US after Canada,” analysts at BMO Capital Markets said.

“Furthermore, given the attempt to limit even non- US citizens from facilitating transactions it is possible that activities as simple as exchanging currencies may become more expensive for Rusal given the international scope of its operations and sales being priced in US dollars.”

Rusal shares are down more than 50%.

Resistance comes in at $2,135, where the 55- and 100-day moving averages meet. Support is at $2,060, near the 21-day moving average.

Mr. Trump predicted on Sunday that China would take down its trade barriers, expressing optimism despite escalating trade tensions between the world’s two largest economies that have roiled global markets. The two countries have threatened each other with tens of billions’ worth of tariffs in recent days and Chinese officials have said this is not the time for negotiations.

Copper was up 0.90% at $ 6,830 a ton, zinc was down 0.60% at $3,211, lead lost 0.30% to $ 2,385, tin added 0.60% to $21,180 and nickel rose 1.2% to $13,435. —