Shanghai aluminum hits two-month high after Rio Tinto force majeure

BEIJING — Shanghai aluminum prices hit a two- month high on Monday after Rio Tinto said it would declare force majeure on certain customer contracts in light of US sanctions on its partner, Russian aluminum giant Rusal.

Rusal holds a 20% stake in Rio’s Queensland Alumina refinery in Australia, as concerns over supply shortages focus not only on aluminum but also the substance used to make the metal.

AFFECTED BY SANCTIONS

“China and Russia’s aluminum industry are now both affected by the sanctions,” consultancy AZ China said in a note over the weekend, referring to a 10% import tariff imposed by US President Donald Trump.

“Trump’s policies are bound to have an impact on the global aluminum landscape.”

China, the world’s largest aluminum producer, “may be able to step in and supply metal to Rusal customers, possibly even for political reasons”, but this would be “only a temporary alleviation on the impact,” said AZ China.

The most- traded June aluminium contract on the Shanghai Futures Exchange (ShFE) was up 0.60% at 14,580 yuan ($2,321.21) a ton by the mid-session interval. It earlier touched 14,670 yuan a ton, its highest since Feb. 12.

Three-month aluminum on the London Metal Exchange ( LME) was flat at $2,284.50 a ton at 0330 GMT, after hitting a six- high year of $ 2,340 a ton on Friday and posting its biggest weekly gain since the current contract was launched.

Rio Tinto said on Friday it was reviewing Rusal’s 20% stake in the Queensland Alumina refinery, Rusal’s supply and offtake arrangements, bauxite sales to Rusal’s refinery in Ireland and offtake contracts for alumina.

RUSSIA WATCH

Rusal shares fell more than 20% to a record low in early trading in Hong Kong. The stock was last trading at HK$1.59 ($0.2026), down from HK$4.64 on April 6 before US sanctions were imposed.

Three-month copper on the LME was down 0.20% at $6,818.50 a ton, after edging up 0.10% on Friday, while ShFE copper slipped 0.10% to 50,350 yuan a ton.

Asian share markets were mixed and oil prices fell on Monday as relief US-led strikes on Syria looked unlikely to escalate was tempered by concerns at Russia’s potential reaction to new sanctions from Washington. —