2023-09-12 14:19:40
Russian aluminum is dividing the metals industry as producers and consumers meet this week to hammer out next year’s supply deals.
Some industrial consumers have refused to buy from Russia following Moscow’s invasion of Ukraine, but others say there is no need to do so when sanctions are not enforced. do not apply to a company or its metal.
The debate over banning Russian metal is set to resurface in Barcelona this week, after Norwegian producer Norsk Hydro in July urged the London Metal Exchange (LME) to reconsider its decision not to ban aluminum from Russia .
The Fastmarkets international aluminum conference, which begins Wednesday, takes place during the market’s “mating season,” when companies seek to strike supply deals.
“I think self-sanctioning has increased over last year,” said Duncan Hobbs, research director at Concord Resources.
“Some aluminum consumers are launching tenders for supply contracts for 2024, specifically excluding Russian metals,” Mr Hobbs added.
However, leading Russian producer Rusal, which accounts for 6% of global supply, says many Asian and European consumers continue to buy its material.
Last month, Rusal said it had increased sales in Asia and that Europe remained a key market, accounting for more than 30% of revenue in the first half of 2023.
Five European industry associations called on the LME to ignore calls for a ban and Rusal criticized rival Hydro, saying it was seeking to destabilize the market for its own benefit.
Stocks of aluminum of Russian origin in LME-approved warehouses and available on the market increased this year to 81% of the total in August, compared to 41% in January.
As some consumers shy away from Russian metal, more materials are heading to China. The Russian metal’s share of total raw aluminum imports to China jumped to 46% in the first seven months of this year, compared to 27% for the whole of 2022.
Industry players in Barcelona will also be watching for signals on the demand outlook as weak global growth and stable production in China weigh on prices.
The benchmark price of the lightweight metal used in transportation, construction and packaging has fallen 8% since the start of the year, pressured by concerns over weak growth in China, the main consumer, and interest rate increases in other countries.
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