LONDON EXCHANGE BANS RUSSIAN METAL
A source predicts price reaction to be muted when trading resumes today
THE London Metal Exchange (LME) on Saturday banned from its system Russian metal produced on or after April 13 to comply with new United States and United Kingdom sanctions imposed for Russia’s invasion of Ukraine.
The sanctions aim to restrict revenues for Russia from the export of metal produced by companies such as Rusal and Nornickel that help to fund its military operations in Ukraine.
The US Treasury Department and the British government on Friday prohibited the 147-yearold LME and the Chicago Mercantile Exchange (CME) from accepting new Russian production of aluminium, copper and nickel.
If an owner of Russian metal can provide evidence that it was produced before April 13, it can still be put on LME warrant — a title document conferring ownership, the LME said.
In response to a Reuters question on the sanctions and the share of Russian metal in its warehouses, the CME said: “We are reviewing and will communicate any impact to our markets. We do not disclose the origin or brands of the eligible or registered metal we have in store and that is consistent across all of our physically delivered markets.”
On Friday, a UK official said Lon- don expected any market disruption to be short-lived and that the government had consulted with colleagues in the US, the LME, the Bank of England and the Financial Conduct Authority to minimise any impact.
The announce- ment of the ban was made while trading was closed for the weekend.
One industry source, speaking on condition of anonymity, predicted price reaction would be muted when trading resumes in Asian time today, while another said a repeat of the kind of aluminium price jump spurred by US sanctions on Rusal in April 2018 was possible.
Both said any European Union sanction would be almost certain to trigger a price surge. The bloc last year imported around 500,000 tonnes of aluminium for use in transport, construction and packaging.
The action does not block bilateral contracts between two companies, rather than via the LME, British officials said on Friday. The officials said continued trading of Russian metals off of the exchanges is expected to be at a discount and that it does not restrict supply.
The share of available aluminium stocks of Russian origin in warehouses approved by the LME stood at 91 per cent in March, while the proportion of copper stocks rose to 62 per cent from 52 per cent in February. Russian nickel in LME warehouses amounted to 36 per cent of the total.
Britain banned the import of base metals from Russia in December and said it would extend the prohibition to ancillary services when it could be done in concert with international partners.