All the consequences of the US sanctions on Russian aluminum. Is China celebrating?
The United States considers sanctions or restrictions on Russian aluminum. How will the market react? Will China replace Russia? All the details
The United States could impose sanctions or other restrictions on aluminum produced in Russia as a form of economic retaliation for the invasion of Ukraine.
The administration of Joe Biden, in fact, is evaluating several options: sanctions on Rusal, the largest Russian producer of the metal; an import ban; punitive duties on Russian supplies.
After China, Russia is the country that produces the most aluminum in the world. For this reason, if the United States were to effectively ban supplies, the market could undergo a strong shock: it is not certain that Chinese producers will be able to compensate for the Russian volumes "expelled".
In a statement, Goldman Sachs bank said that "in a scenario of sanctions on Russian aluminum, the western aluminum market would be exposed to an extreme tightening" of supply. As a result, prices would go up a lot.
In March, immediately after the invasion of Ukraine, aluminum prices rose to a record high. But then they fell, for two main reasons: because Russia continued to export the metal to the markets, and because the European energy price crisis led factories to suspend their activities.
News of the White House's intentions pushed aluminum prices on the London Metal Exchange (the main metal exchange) up 1.9 percent today to $ 2,348 a ton. Rusal's shares on the Hong Kong Stock Exchange lost up to 8.1 percent.
Chaos Ternary, a Shanghai-based research institute, wrote in a note – reported by Bloomberg – that “the worst case scenario is for Europe and the United States to block Russian aluminum. Blocked Russian aluminum ", in the sense of being unable to access the American and European markets," will most likely spill over into China, India and elsewhere, followed by Chinese exports of aluminum products to Europe and the United States to bridge the gap " .
China is both the largest aluminum producer in the world and the largest consumer. Bloomberg explains that Chinese industries could use Russian aluminum in their production processes, buying it at discounted prices, in order to allocate the domestic production metal for export. Chinese demand for aluminum, however, is falling.
The United States had already imposed sanctions on Rusal in 2018, but these were lifted in early 2019 due to the upheaval they wreaked on the market.
THE VOLUMES OF PURCHASES
In the period March-June 2022, the European Union imported from Russia on average 78,207 tons of aluminum per month, 13 percent more than in the same period in 2021. The authority of the port of Rotterdam, the largest in Europe, said that the volumes of Russian aluminum handled grew by 0.8 percent in the first half of 2022, and break bulk cargoes (those not shipped in containers) by 17.7 percent.
In the United States, on the other hand, growth in percentage terms was higher (+21 per cent), even if the monthly quantities purchased from Russia were lower (23,049 tons). American steel companies cannot do without Russian aluminum because they are already giving up on Chinese aluminum.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/stati-uniti-restrizioni-alluminio-russia/ on Thu, 13 Oct 2022 10:31:21 +0000.