The London Metal Exchange (LME) has announced a ban on Russian metal produced on or after April 13, in compliance with recent U.S. and UK sanctions following Russia’s invasion of Ukraine. These sanctions are aimed at curbing revenue streams that contribute to funding Russia’s military operations in Ukraine, particularly from companies like Rusal and Nornickel.
Effective immediately, the U.S. Treasury Department and the British government have prohibited the LME and the Chicago Mercantile Exchange (CME) from accepting new Russian production of aluminum, copper, and nickel.
The LME clarified that Russian metal produced before April 13 can still be included on LME warrant, provided owners can provide evidence of its production date. However, there are restrictions in place for UK LME Members and clients regarding the cancellation or withdrawal of corresponding metal unless it’s done for the account of a non-UK client.
In response to inquiries regarding the impact of these sanctions on markets, the CME stated that they are currently assessing the situation and will communicate any relevant information. They also reiterated their policy of not disclosing the origin or brands of metal stored in their facilities.
British officials anticipate any market disruptions to be short-lived and have coordinated with relevant parties to minimize impacts. However, they noted that any European Union sanctions could lead to price surges.
Despite the ban, bilateral contracts between companies are not affected, and trading of Russian metals off the exchanges is expected to continue, potentially at a discount. The LME has seen a significant proportion of its aluminum, copper, and nickel stocks originating from Russia, raising concerns among some producers and Western consumers.
Britain had previously imposed a ban on the import of base metals from Russia and intends to extend this prohibition to ancillary services in collaboration with international partners.
The LME, owned by Hong Kong Exchanges and Clearing (0388.HK), remains the world’s largest and oldest platform for trading metals.
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