Aluminium and nickel futures surged to multi-month highs on Monday following the imposition of new sanctions by the U.S. and UK targeting Russian metals.
Russia, a significant producer of aluminium and nickel, as well as copper and other metals, faced repercussions as three-month aluminium on the London Metal Exchange (LME) spiked 5.2% to a 22-month high of $2,624 per metric ton by 0440 GMT. Similarly, the LME nickel contract climbed 3.6% to $18,445 per ton, reaching its highest level since September 2023.
The recent sanctions, enacted by Washington and London, prohibit metal-trading exchanges from accepting new aluminium, copper, and nickel produced by Russia, and restrict the import of these metals into the U.S. and Britain. The objective behind these measures is to curb revenues for Russia generated from the export of metals produced by companies like Rusal and Nornickel, which contribute to funding its military activities in Ukraine.
In response, the LME implemented a ban on Russian metal produced on or after April 13, while the CME Group suspended aluminium produced in Russia from the same date. Analysts from China Futures anticipate a reduction in deliverable aluminium on these exchanges, potentially leading to increased prices of the metal outside of China. They also predict a potential shift of Russian aluminium exports towards China, adding pressure on supply dynamics while possibly encouraging more metal exports from China.
On the Shanghai Futures Exchange (SHFE), the most-traded June aluminium contract reached a two-year high in the morning session, rising by 0.8% to 20,740 yuan ($2,865.23) per ton, while nickel increased by 0.8% to 138,510 yuan.
Elsewhere, LME copper experienced a marginal decrease of 0.1% to $9,449 per ton, zinc declined by 0.9% to $2,804, lead dropped by 0.9% to $2,157, and tin gained by 0.5% to $32,525. SHFE tin rose by 1.9% to 253,700 yuan per ton, zinc fell by 0.3% to 22,775 yuan, lead remained steady at 16,695 yuan, and tin increased by 1.9% to 253,700 yuan. ($1 = 7.2385 Chinese yuan)
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