LME to suspend Rusal’s metal from its brand list; aluminium price is on surge

Since when the Trump administration has announced punitive sanctions against a list of Russian individuals and entities including the aluminium-giant Rusal, every individual associated with aluminium industry has been anticipating the most dreadful conditions to come. One of them was Rusal’s suspension from the London Metal Market’s brand list, which is going to turn true very soon as the London Metal Exchange approves suspension of Rusal’s metal from its brand list. This would be put into effect from April 17, 2018, according to a report.

From that date onwards, any metal owner wanting to place warrants on aluminium under any brand of Rusal will have to provide written evidence as a proof to not violate sanctions. Otherwise, the LME warehouses will not accept it for storage.

This is a joint decision by the Special Committee of the exchange in connection with the company’s inclusion on the SDN list, as per the report, and the purpose for this temporary conditional suspension is to ensure that the metal is subject to sanctions.

The time limit of this suspension will be determined soon after the metal exchange involves into further interact with stakeholders, as reported by LME in a notice.

However, the LME’s decision to impose restrictions on Rusal’s metal has already started taking a toll to the aluminium price, as the latter surged to the highest in over the last two months yesterday April 10, 2018.

Benchmark aluminium on the London Metal Exchange touched a peak of US$2, 242, up by 4.2 per cent soon after the LME released its notice. Prior to that, the LME aluminium had closed at US$2,201, up 2.9 per cent.

Responding to this, Caroline Bain, Capital Economics commodities economist said, “It’s quite clear that the sanctions could lead to lower production from Russia and Rusal is a big enough producer to move prices.”

In the year last, Rusal produced 3.7 million tonnes of aluminium, about 7 per cent of the total world production.