Citigroup buys $160 million of Russian aluminium from LME; will it lower Russian-origin stocks in LME?

According to a recent report, Citigroup Inc., an American multinational investment bank and financial services corporation, has bought about $160 million worth of Russian aluminium, produced at Rusal, from the London Metal Exchange.

Russian-origin stocks in LME-registered warehouses have been growing gradually this year as many global companies resorted to different countries for procuring aluminium for their needs.

As per the latest update in July 2023, Russian aluminium represents over 80 per cent of LME warehouse inventories, an all-time high, marking the fourth month-on-month increase in the last five months. In January, Russian aluminium share in LME was 41 per cent, while that in February increased to 46 per cent, March 53 per cent, April 52 per cent, May 68 per cent, and June 80 per cent.

The LME-approved warehouses kept stocking Russian aluminium despite the risk to its position as a global benchmark. Alcoa CEO Roy Harvey had requested the exchange to delist Russian aluminium from its warehouses, citing that it could lead to a nonfunctioning market.

Norsk Hydro also wrote a letter to the London Metal Exchange urging to rethink the decision not to ban Russian aluminium from its warehouse network. Norsk Hydro also believes that a large volume of aluminium arriving from Russia is weighing on the benchmark metal price on LME.

According to Hydro, the constant rise of Russian aluminium in LME-approved warehouses indicates nothing but disacceptance of the metal in the world market. The company further noted that consumers were shunning Russia-origin aluminium despite no international sanctions.