Aluminum Price Surges After White House Weighs Ban On Russian Metal

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by Tyler Durden
Wednesday, Oct 12, 2022 - 05:01 PM

The Biden administration's economic war against Russia could soon be stepped up a few notches as Bloomberg reports the White House is considering a complete ban on Russian aluminum. 

People familiar with the matter said the White House is reviewing three options: an outright ban, expanding tariffs to levels that would impose an effective ban, and or sanctioning the country's top metal producer, United Co. Rusal International PJSC. 

Whatever route the White House takes against Russia could have severe consequences for global metal markets, forcing customers in the US, Europe, and elsewhere into a panic to source replacement metal.

LME aluminum prices jumped as much as 7% on the news. 

Russia is the world's second-largest producer of aluminum after China. Bloomberg cited trade data showing Russia supplies about 10% of US aluminum imports. It also showed Russia was the third largest exporter to the US in August. 

We noted last week that the London Metal Exchange (LME) considered plans for a potential ban on new Russian metal supplies. Alcoa Corp., the US' largest aluminum producer, recently sent a letter to the LME indicating Russian metal could be dumped on global markets and suppress prices. 

Today's news has sent Alcoa shares up more than 8%. Other aluminum makers surged as well. 

The Biden administration has held off sanctioning Russian aluminum for fear of disrupting global markets, but now that might not be the case as the ongoing war, now in its eight-month, continues with no end in sight. Meanwhile, US/EU sanctions against Russia to limit energy flows into global markets have backfired. 

The sources said the high-level discussions about banning Russian aluminum have been ongoing for weeks.