LME plans to limit aluminium trade with Russia; Chinese producers to reap benefit

According to Platts analytics, domestic aluminium prices in China have increased over a week based on the possibility that the London Metal Exchange may curb the entry of Russian metal, Beijing’s support for domestic producers, and production cut in both Europe and China. There is also a probability for volatile domestic aluminium prices until LME finally decides to suspend trading and storage of Russian metal, said Platts analytics.

According to the Shanghai Futures Exchange (SHFE), the most active SHFE aluminium futures contract for November delivery closed 1.6 per cent higher at RMB 18,565 per tonne than settlement holiday prices, primarily in response to the LME price hike.

Till October 6 from the beginning of the month, the aluminium price on the London Metal Exchange rose by US$175 per tonne or 8 per cent to US$2,355 per tonne.

Last week, on October 6, the LME published a discussion paper stating the possibility of a ban on the imports of aluminium, nickel and copper from Russia. Meanwhile, China and Europe continued to cut their output capacities.

Earlier, markets were worried about the pressure that arrivals of aluminium from Russia to the LME-registered warehouses could put on the global aluminium benchmark price. Russia is a leading primary aluminium producer after China, accounting for 6 per cent of the world’s total production.

Sources foresee China’s imports from Russia are not expected to rise in the coming months as domestic capacity grows. Sichuan smelters are resuming production though progress remains slow due to new cases of COVID-19 and repairs to electrolysis tanks.