Glencore to terminate contract with Rusal for aluminium supply: Sources

Anglo-Swiss miner and commodity trader, Glencore Plc has decided to terminate 50,000 tonnes of contract specifying metal of Russian origin, Rusal in particular, as reported by anonymous sources.

In the recent time, amidst a series of news clouding the internet relating to the US slapped punitive sanctions on Rusal, Glencore to declare force majeure on aluminium supply from Russia has not missed to grab the attention of many stalwarts in the industry.

Initially, it was not very clear what volume would come under force majeure or which buyers would be affected.

On Tuesday April 10, Glencore reported while evaluating the contracts that those contracts with Rusal were not very “financially material” to the company.

However, the declaration of force majeure did not appear as a surprise to most of the aluminium buyers in the US as they were certain about this consequence, since Rusal is barred by the US to supply aluminium to its consumers, and Glencore was one of the biggest customers of Rusal for aluminium supply. Thus, Glencore had no choice but to stop the contract.

“It’s not a lot of metal, I would’ve expected more,” one European trader said. “What you tell me is not a surprise.”

Another European source commented on this occasion, “[That cancelled volume is] very small – [especially] due to the fact that, by design, they could only deliver sanctioned metal.”

A third European trader said, “It’ll scare the consumers even more.”

On the other hand, on the face of these developments, the duty-unpaid Rotterdam spot P1020 premium was reported to have traded at US$140 per tonne, much higher than Metal Bulletin’s current assessment of US$102 per tonne. American Metal Market’s latest assessment of the US Midwest P1020 premium places it at 22-23 cents per lb, up more than 18% week on week.