Sanctions fallout upends metals as aluminum, nickel burst higher
The turmoil unleashed by US sanctions against United Co. Rusal reverberated in metals markets, sending aluminium and nickel to multi-year highs.
Global metals markets have been rocked for the past two weeks by the clampdown on Russia’s Rusal, which set off a rush for alternative supplies and stirred concern that further US action could affect other markets like nickel.
Aluminum rallied as much as 7.1%, a record intraday gain, to $2 718/t in London. Since the start of April, prices are up more than 30%.
Nickel surged to a three-year high as traders speculated that other major mining companies could face the ire of US officials. Prices climbed 5.4% to $16 095/t on Thursday.
The US sanctions are upending the global supply chain for aluminum, which is used in planes made by Boeing Co. and Ford Motor Co. trucks. Rusal is the world’s biggest producer outside China, supplying about 6% of the world’s aluminium. It operates mines, smelters and refineries across the world from Ireland to Jamaica.
“The aluminum price move is justified,” said Colin Hamilton, managing director of commodities at BMO Capital Markets. in London. “In nickel, I think it’s a misinterpretation.”
Rusal officials met Chinese companies and traders this week to discuss the possibility of selling output in the Asian country, while buying alumina, according to people with knowledge of the talks.
“The response to aluminum has been logical as the market slowly understands the extent to which Rusal penetrates into the aluminum industry,” Mark Keenan, head of Asia commodities research at Societe Generale SA, said in an interview on Bloomberg Television. “Perhaps these gains are justified as people are calling for prices above $2,500.”
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