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LME bans Russian nickel from its UK warehouses
LME bans Russian nickel from its UK warehouses

August 17, 2022 – The LME has banned Russian nickel products from its warehouses in the UK. Chinese steel and aluminum producers are having to cut production or stop altogether due to energy rationing. Tsingshan is actually considering possible sales of Indonesian group shares, according to official company statements. And Asian base metals are showing positive today.

LME bans Russian nickel from its UK warehouses

Russian nickel is no longer allowed to be stored in authorised British warehouses, according to the London Metal Exchange (LME), unless it is exported by July 20. This became known yesterday, Tuesday.

The action comes after a decision to prohibit other Russian metals, such as copper, lead, primary aluminum, and aluminum alloy, from being stored in British warehouses as of April 1.

That came about as a result of the British government imposing 35 percent higher levies on certain metals as part of a series of measures against Russia for invading Ukraine, which have since been expanded to include nickel.

The exchange stated that none of its British warehouses were currently holding any Russian nickel.

The LME argued that there was a significant risk that someone sourcing such metal from UK warehouses would be charged very high additional costs.

Chinese aluminum and steel producers have to reduce production

Since August 17, twenty steel mills in China’s northwestern regions (Sichuan, Guizhou, Yunnan, and Chongqing) have significantly cut back or stopped production altogether. Aluminum smelters in southern China also report having to reduce production due to energy rationing.

Aluminum futures on the SHFE in particular reacted to these announcements with price jumps of more than 3.75% in some cases.

Base metals with gains

Overall, base metals in Asia have shown positive today. For aluminum (+3,75%), nickel (+0,18%), copper (+0.32%), lead (+0.5%), tin (+0.22%) and zinc (+2.56%) futures are up.

Tsingshan confirms possible sale

Speaking to Reuters agency, Tsingshan Group has confirmed the possibility of selling Indonesian group shares – in particular stainless steel and nickel – to Chinese state-owned Baowu. Already yesterday Bloomberg had reported that, according to group sources, there are talks about a possible sale of shares in the company. The background to the possible sale is likely to be the collapsed nickel deal from March 2022, which is likely to have brought the group a loss of billions. Among other things, the Chinese state had stepped in to save Tsingshan from bankruptcy.

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