Is the US government banning Russian aluminium?
Is the US government banning Russian aluminium?

13 October 2022 – The US government is currently considering a ban on Russian aluminium and is already looking at several options. LME is coming under increasing political pressure. Customers are already looking for alternatives for Russian raw materials, even if they are not yet sanctioned. And now it is a matter of stabilising supply chains, not reducing them.

Is the Russian aluminium ban coming?

Not only since yesterday has the question been circulating in the aluminium industry as to when the total ban on Russian aluminium products, e.g. in the European Union or also in the United States, could come. On Wednesday there were reports that the White House was considering possible sanctions against Russian aluminium and that several options were already on the table.

This led to a significant jump in aluminium prices of up to 7% on Wednesday. And today aluminium is already pointing upwards again on the LME.

Several options possible

According to media reports, the White House is currently considering three options: a complete import ban, raising tariffs to a level high enough to constitute an effective ban, or imposing sanctions on the company that produces the country’s metal, United Co Rusal International.

Rusal still wants to avoid LME ban

Almost time equal, reports are coming in that one of the world’s biggest aluminium producers, Rusal, is expected to hold talks with the London Metal Exchange on Friday – to stop it banning Russian commodities – such as aluminium, nickel and copper – from the commodity exchange and from its global warehouses. The LME had initiated a discussion paper to this effect at the end of September 2022, after political and economic pressure on the commodity exchange grew significantly due to Western sanctions against Russia.

Russian copper no longer wanted?

In addition, many international companies seem to have already drawn a line under their commodity relations with Russia and, for example, explicitly reject copper of Russian origin in their purchases. Either because they regulate themselves or because the companies’ customers no longer want any Russian raw materials in their products. This is already clearly reflected in the high copper stocks of Russian origin in the warehouses of the LME.

Who could support a US ban?

Should the United States actually impose punitive tariffs or a complete ban on Russian aluminium, the European Union, but also the G7 countries, would soon follow suit.

The European Union has already made clear where the political will in the West lies with import bans on steel products originating in Russia that have been further processed in third countries.

Stabilise supply chains, not reduce them

The importance of supply chains should have become clear by now to even the last consumer who had to wait for a delivery in the last three years. Not only since the Ever Given accident in the Suez Canal in March 2021, when one of the world’s largest container ships blocked the canal and was processed in more than one internet meme consumer effect.

Reduce freight capacity?

No sooner has the global economy managed to reduce congestion at the ports somewhat and freight rates stabilised at an albeit high but realistic level than voices are being raised calling for an immediate reduction in freight capacity.

Important Christmas business is coming

And this is just before the important Christmas business, which accounts for a considerable part of the turnover of western companies. The US retail giant Walmart alone has to stock 600 warehouses in the United States for the Christmas season. And Walmart is just one company among many that will need to restock in the coming months.

Providing important stimulus to the economy

Chinese trade is expected to experience significant double-digit growth in the fourth quarter of 2022 alone and is expected to reach new highs. Bringing a capacity reduction in container transport into play at this time could therefore be disastrous and really screams “greed eats brains”.

In any case, we are glad that we have expanded our group with our own logistics company.

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