Alcoa predicts international sanctions on Russia to inflate aluminium prices and squeeze alumina supply

According to Platts report, Alcoa’s chief financial officer Willian Oplinger shared his forecast that aluminum prices would continue to inflate while alumina supply to become tighter as a result of international sanctions imposed on Russia due to its military invasion of Ukraine.

“It’s a very fluid situation … it will really depend on how long this drags out and how long the sanctions are in place,” CFO stated during a presentation at the Deutsche Bank Global ESG Conference on Monday, February 28.

Market demand for aluminum is likely to remain unfulfilled in Europe and the US by the Russian aluminum producers, resulting in heightening pressure on the recent high level of premiums in both regions, pointed out Oplinger.

Platts found out that spot price of 99.7% P1020 US aluminum was delivered to Midwest at a record premium of 37.75 cents/lb on Friday, February 25, while the next target of market participants was the premiums of 40 cents/lb or higher, as there were fears of sanctions of Russia and disruptions of energy supplies needed for producing the metal.

William Oplinger also drew attention by saying that sanctions may squeeze an already-short global alumina market if Russian aluminium producers shut down their operational activities at refineries or face challenges in sourcing bauxite. His anticipation came true when Rusal announced the suspension of shipments from its 1.7 mtpa Nikolaev refinery in Ukraine, resulting in increased supply disruptions across the alumina and aluminium market.

Rusal said it halted shipments from Nikolaev due to logistical challenges linked to events in the country.