LONDON: Aluminium prices headed toward record highs on Tuesday as financial sanctions on Russia for invading Ukraine fuelled worries about supplies from producer Rusal, while concerns over shipping disruptions boosted nickel.
Benchmark aluminium on the London Metal Exchange was up 3.5% at $3,487 a tonne at 1707 GMT. Prices of the metal used widely in the transport, packaging and construction industries hit a record high of $3,525 a tonne on Monday.
“Of all the major industrial metals, aluminium seems to be the most exposed. Traders are already on their toes, not least due to the experiences of 2018 when sanctions were placed on Rusal,” Julius Baer analyst Carsten Menke said.
SANCTIONS: Financial measures that include a decision by Western allies to block “selected” Russian banks from the SWIFT payments system could disrupt shipments of commodities such as aluminium and nickel from Russia.
RUSAL: Russian aluminium producer Rusal halted production at the Nikolaev alumina refinery in Ukraine, citing logistical challenges on the Black Sea and the surrounding area.
“The key risk to the aluminium market is that the loss of this alumina supply results in an eventual suspension of primary smelting capacity in Russia, with around 900,000 tonnes a year production at risk,” Goldman Sachs analysts said in a note.
“Smelters typically carry up to a month’s worth of alumina and other raw material inventory, so we would assume there is some buffer before metal supply adjustments have to occur.”
Rusal is the world’s biggest aluminium producer outside China, accounting for around 6% of global supplies, estimated by analysts to be 70 million tonnes this year. NICKEL: Russia supplies the world with around 10% of global nickel, which is used to make stainless steel and batteries for electric vehicle.
Nickel industry sources said shipping lines halting traffic to and from Russia could disrupt nickel supplies to global customers.
Three-month nickel gained 3.4% to 25,110 a tonne, having touched an 11-year high of $25,705 last week.
OTHER METALS: Copper was up 1.7% at $10,050 a tonne, zinc added 2.1% to $3,745, lead rose 1.2% to $2,415 and tin was up 1.3% at $45,800.
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