More than half of aluminium in LME warehouses produced in Russia

Reuters

Published Apr 11, 2023 13:14

Updated Apr 11, 2023 17:01

By Polina Devitt

LONDON (Reuters) - The share of Russian aluminium stocks in warehouses registered with the London Metal Exchange (LME) climbed to 53% of the total in March, or 220,575 tonnes, from 41% in January, data on the exchange's website showed on Tuesday.

The data suggests that consumers in industries ranging from transport to construction and packaging continue to shun Russian metal.

"Companies in Europe and in some parts of Asia do not want Russian aluminium. They may have contracts so they will take it, but they will not use it and instead deliver it to the LME," an aluminium industry source told Reuters.

The world's oldest exchange and largest market for industrial metals has not banned Russian metals from being traded and stored in its system since Moscow invaded Ukraine, as there are no Western sanctions on Russian base metals.

It, however, suspended the inflow of Russian metal into its U.S. registered warehouses from late February after the United States announced import tariffs on Russian metal.

These U.S. import tariffs have further complicated the use of Russian aluminium produced by Rusal, which already had some self-sanctioning consumers.

Commodity trader Glencore (LON:GLEN), which has a multi-year contract with Rusal, deposited tens of thousands of tonnes of Russian aluminium in LME-registered warehouses in Asia in recent months, sources with knowledge of the matter have told Reuters.

Glencore said in February that "there is nothing abnormal" about these deliveries and that its contract with Rusal would expire in the second half of 2024.

The rising share of Russian aluminium in warehouses "appears to have happened in a market which faced seasonal oversupply, as indicated by rising inventories (not only on the LME but also along the value chain)," said Julius Baer analyst Carsten Menke.