Consistent with reports, doubts over the supply of aluminium to the global market, following the sanctions against Russia, caused prices to reach new highs. Russia is one of the largest aluminium producers and much of its material goes to Europe. Broader sanctions could tighten up supply even further,” said a commodity market strategist at Bank of China International.
Fears following sanctions have resulted in a rapid increase of the price of aluminium.
The London Metal Exchange (LME) recorded an increase in the price of aluminium by 3.3% to $3,402 a tonne, by 17:00 GMT after reaching a record of $3,480. This inflation of price in aluminium follows the trend of gas prices, which also increased rapidly.
With the prices inflating and shortage fears, companies attempted to secure the metal they needed for their products.
Russia accounts for 6% of global aluminium production, and between Jan 2021- Jan 2022, produced 72,256 thousand metric tonnes of aluminium, the second largest producer to China (and ex china).
Currently, no Russian aluminium brands have been directly subject to sanctions.
In due course the LME stated: “The LME maintains a list of global metals brands, and the metal produced by these brands can be placed on warrant and stored at an LME registered warehouse. A warrant is used to settle a relevant LME contract. In the event that any brand is subject to sanctions, we are in a position to respond swiftly and appropriately to take action in respect of the brand. Such action might include suspending the brand, or suspending production from a certain date. Due to the global nature of the LME brand list, continuity of supply can still be achieved even in the event of some brands being sanctioned due to their location.
“Neither the LME nor LME Clear have any Russian entities as members. The LME understands that a small number of members may have positions, directly or indirectly, with individuals or entities, which have become subject to sanctions. We would encourage members to undertake their own checks against relevant sanctions lists and notify the LME if they identify sanctioned individuals as direct or indirect clients.”