Share of Russian aluminum in LME warehouses rises to 90% after UK curbs

Reuters | January 10, 2024 | 9:31 am Intelligence Markets Europe Russia and Central Asia Aluminum 

Bratsk aluminium smelter. (Reference image by UC Rusal Photo Gallery, Wikimedia Commons).

The share of available aluminum stocks of Russian origin in London Metal Exchange-approved (LME) warehouses rose to 90.4% in December from 78.8% in November, data on the exchange’s website showed on Wednesday.

The rise follows a restriction imposed by Britain from Dec. 15 on UK entities and individuals taking physical delivery of Russian-made base metals, part of wider sanctions on Moscow for its war in Ukraine.

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The crackdown along with muted demand in the physical market contributed to additional deliveries to the LME-registered warehouses, dubbed as a market of last resort.

“People are getting more nervous about holding the Russian inventory,” said an analyst.

On-warrant aluminum inventories – those which have not been earmarked for removal and are available to the market – in LME-registered warehouses rose by 74% since the UK sanctions were announced. Warrants are title documents conferring ownership of metal.

“With regard to recent UK government sanctions, the LME is actively monitoring for market orderliness in respect of Russian metal,” the LME, the world’s oldest and largest metals market, said in a separate comment.

The exchange added that “Russian metal continued to flow through the warehousing network during December”.

The amount of Russian primary aluminum stocks on LME warrant rose to 338,375 metric tons in December from 154,775 in November, the data showed.

The high share of Russian-origin metal in LME inventories has been a concern for some producers, which compete with Russia’s Rusal , and some Western consumers who have been avoiding the Russian metal since Moscow’s invasion of Ukraine in 2022.

The share of Russian-origin copper stocks increased to 43% in December from 40% the previous month, the LME said. The amount of Russian copper in inventories rose to 59,725 tons from 55,825.

The Russian nickel share rose to 31% from 26% as the amount increased to 17,772 tons in December from 11,106 tons in November.

(By Polina Devitt; Editing by Pratima Desai, Jan Harvey and Emelia Sithole-Matarise)