The US and UK have imposed restrictions on trading of new Russian aluminium, copper and nickel on the LME and Chicago Mercantile
Exchange.
The restrictions apply to metal produced after April 12 as pre-existing stockpiles are exempt from such sanctions. The sanctions are intended to limit Russia’s revenue from exports of metals produced by companies such as Rusal and Nornickel.
The US Treasury Department and the British government have banned the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) from accepting any new production of aluminium, copper or nickel from Russia.
Reacting to the news, Jefferies analysts said they expect the ban to have “the most significant impact on aluminum prices”, but believe it is also “likely to push up copper and nickel prices”.
“This should be very positive for the stocks of aluminum producers like Alcoa (NYSE:),” Jefferies added.
Meanwhile, analysts said the net impact is positive for flat prices of primary aluminium, copper and nickel traded on the LME as it shifts the previous discount for new Russian units of these metals off-exchange and creates vulnerability to tightening spreads short-lived through future inventory write-offs. .
“However, the measures do not significantly target physical trading of units outside the LME warehouse system, which should moderate the extent of the price impact,” they wrote. “We believe the measures are intended (and will) to drive deeper discounts for new Russian metal production relative to global prices, limiting options for their sale and financing.”