Total Ban on Rusal To Exacerbate Aluminum Shortage

SEATTLE (Scrap Monster): According to analysts, a blanket ban on Russian aluminum producer Rusal is unlikely, even in the event of Russian invasion on Ukraine. A ban in most unlikely as it may further exacerbate shortages of the metal, thus propelling prices to fresh records, they say. Incidentally, Rusal is the largest aluminum producer outside China, accounting for almost 6% of the global aluminum supplies.

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Earlier in 2018, the U.S. had imposed sanctions on Rusal, which had lasted for almost less than a year. This had resulted in disruption of activities in several industries, including transport, construction and packaging. Furthermore, it sent aluminum prices higher by almost 30%. A replay of that error this time would lead to explosion in prices, said Eoin Brophy, analyst at CRU. Even if sanctions are imposed, the existing contracts are likely to be kept out, he added.

The fears about potential supply disruption from Rusal had pushed the LME aluminum prices to $3,333 per tonne last week, close to the record high reported in July 2007.

The markets in Europe and the U.S. are currently facing severe shortages with consumers forced to pay premiums of around $460 per tonne and $790 per tonne respectively over the LME price.

Meantime, Macquarie noted that an element of disruption has already been priced in aluminum and that disruption to Russian aluminum supply is unlikely.