LONDON: Aluminium and nickel prices hit multi-year highs on Tuesday after Russia ordered troops into two breakaway regions of eastern Ukraine, raising fears of war and sanctions on Moscow that could interrupt Russian exports.

Russia produces around 6% of the world's aluminium and 7% of its mined nickel. Sanctions on aluminium maker Rusal in 2018 drove the metal's price up 35% in days.

Benchmark aluminium on the London Metal Exchange (LME) was up 1.9% at $3,343 a tonne at 1115 GMT after reaching $3,380, just shy of 2008's record of $3,380.15.

The metal used in packaging and transport is up almost 20% this year after rising 42% in 2021.

LME nickel was up 1.7% at $24,760 a tonne after touching $24,925, the highest since 2011. Used in stainless steel and batteries for electric vehicles, nickel is up around 20% this year having risen 25% in 2021.

Aluminium hits 13-year high as supply fears outweigh inflows

Even with Russian exports flowing, both metals are undersupplied, said ING analyst Wenyu Yao.

"Before this Russia-Ukraine crisis escalated, they were already seeing very strong fundamentals," she said.

Russia: The United States and its European allies are set to announce fresh sanctions against Russia on Tuesday.

Sanctions Risk: Western countries are unlikely to impose blanket sanctions on Rusal as high aluminium prices would damage manufacturing, analysts say.

Aluminium: Shortages have dragged inventories in LME-approved warehouses to 835,125 tonnes from almost 2 million tonnes in March last year.

The premium for quickly deliverable cash aluminium over the three-month contract is near its highest since 2018 and duty-paid physical premiums in Europe and the United States have risen to record highs.

Nickel: Stocks in LME-registered warehouses have fallen to 82,314 tonnes from more than 260,000 tonnes in April last year, and the premium for cash nickel over three-month metal is near its highest since 2011.

Other Metals: Benchmark copper was up 0.5% at $9,944 a tonne, zinc rose 1% to $3,595, lead fell 0.2% to $2,328.50 and tin was up 0.4% at $44,320.