Aluminum experienced a rally in London following a report by Politico suggesting that the European Union is contemplating sanctions on Russian aluminum in light of the second anniversary of the invasion of Ukraine. Prices surged by as much as 3.6% on the London Metal Exchange, driven by fresh concerns about the influx of Russian metal into western markets, leading to an increase in US and European aluminum stocks.
Despite certain EU member states advocating for aluminum sanctions as part of the bloc’s 13th package, the proposal is met with controversy in several capitals, according to individuals familiar with the discussions as reported by Bloomberg. The implementation of any sanctions would necessitate unanimous support from all 27 EU members.
Russian metals had evaded widespread sanctions until December, when the UK took steps to prevent British individuals and entities from engaging in the physical trading of Russian metals, including aluminum, copper, and nickel. During that time, the UK hinted at the possibility of coordinating actions with international partners, as indicated in the statement announcing the sanctions.
According to a report by Politico on Tuesday, EU countries are set to initiate discussions on measures that could lead to a comprehensive ban on Russian aluminum, as stated by EU diplomats.
Following the UK’s measures, the London Metal Exchange (LME) stated that its members and clients had been granted a license, allowing the continued trading of Russian metals on the exchange. The LME anticipated that the sanctions would not impact trading access to the exchange. However, the regulations may potentially prevent individuals in the UK from withdrawing Russian metal they acquire through the exchange.
Earlier this month, the LME announced it was actively monitoring for market orderliness following a surge of Russian aluminum onto the exchange following UK sanctions.
On Tuesday, aluminum witnessed a 3.2% increase, marking the most significant daily rise in a month. Alcoa Corp., the largest US aluminum producer, saw a surge of up to 10% before moderating its gains. Other metals also experienced gains, with zinc climbing 2.6% and copper rising 0.7%.
