Aluminium Prices Skyrocket
Aluminium prices surged to a record level after the UK and the US decided to ban the trade of Russian metals. This move was aimed at preventing the Kremlin from channeling funds into its war efforts.
Market Reaction
During early morning trading, aluminium prices on the London Metal Exchange (LME) saw a significant increase of more than 9%, marking the largest rise since trading began in 1987. Nickel prices also experienced a surge of over 8% at one point, although both metals later saw a decline in prices.
Impact of the Ban
The UK and US imposed sanctions on Russia, specifically targeting new production of aluminium, copper, and nickel. British Chancellor Jeremy Hunt stated that the ban was intended to limit the flow of funds into Russia’s military activities. Russia’s metal production represents approximately 5% of global aluminium supplies, 6% of nickel, and 4% of copper.
Aluminium is a crucial material in various industries, including manufacturing, automotive (bodywork on cars), aerospace (airplane components), packaging (cans, foils), and electronics (TVs).
While a prolonged increase in aluminium prices could lead to broader economic impacts and potential inflation concerns, analysts from Goldman Sachs believe that the ban is unlikely to disrupt the overall supply chain significantly. They noted that Russian producers could still sell metals to non-UK/US markets without major trade flow disruptions to Western markets.
The price of copper, another essential industrial metal, remained relatively stable despite the developments in the aluminium and nickel markets.
