After crude oil, Europe is again 'drums beat forward, trumpet blows backwards' with metal from Russia

Last month, 13 copper industry representatives at the London Metal Exchange were asked whether Russian metal should be blocked from their warehouses. 10 of them said "yes". But when the nickel and aluminum advisory groups discussed the same question, the unanimous answer was "no".

The LME, it was decided in the end, said it would not take any action beyond government sanctions - which has kept the metal industry from being shaken so much in the past.

But the results of these closed-door discussions also point to a fact: the world cannot bear another shock to the metal supply. In fact, important metals like aluminum and copper were in serious shortages, even before Russia invaded Ukraine.

Currently, Russian metal is still flowing largely to factories and construction sites around the world. Many traders and manufacturers buy from Russian companies because they have signed contracts in advance, which last for many years.

Still, a large number of industry insiders said they would not engage in Russian-related business. This makes it difficult for Russian metal producers to find new contracts. Eventually, they may have to cut production by the time the long-term contracts end.

"We've noticed from our customer base there's hardly any interest in Russian metals if they can be avoided. And in fact they can," Roland Harings – CEO of copper giant Aurubis AG - represented on the MLE copper committee.

The question is how this situation will affect the global market. Russia is a major supplier of metals such as palladium, nickel, aluminum, steel and copper. Prices for all metals set all-time highs in March, although steel is the only commodity subject to sanctions so far.

 

Aurubis, Europe's largest copper smelter, is "trying to pull out" of contracts from its Russian supplier and favor sanctions on the metal, Harings said in an interview last week. .

Norwegian aluminum company Norsk Hydro ASA said it was trying to impose a minimum on contracts from Russia and aim to reduce the target further.

Of course, there are still buyers of Russian metals, even in Europe. Russian metal producers such as MMC Norilsk Nickel PJSC and United Co, Rusal International PJSC tend to sign annual or multi-year contracts to large industrial corporations and most of these contracts are still being delivered. Translate.

Companies such as Glencore, which has agreements to buy aluminum from Rusal at least until 2024, and Trafigura Group, which has a longstanding relationship with Nornickel, are also completing contracts with Russia. However, there are still major challenges.

Most container shipping lines have stopped calling at Russian ports. Precious metals such as gold and palladium are usually flown to Switzerland or London by plane, but most flights out of Russia have now been suspended. It is nearly impossible to find banks willing to support Russia's new metal purchases, traders said, even in China, the world's largest metal consumer.

The LME said it would not impose restrictions on Russian metals that bypass government sanctions. However, any move by the US, UK or EU to target the Russian metal could cause the exchange to block new deliveries.

Last week, the LME made the symbolic decision to ban shipments of Russian aluminum, copper and lead from its warehouses in the UK, in response to new import duties imposed by the UK.

"The West will have to figure out how to use less of Russia's metals. We'll see trade flows redistributed, even if the Russia-Ukraine conflict ends," said Duncan Hobbs, research director at the Russian Federation. Concord Resources Ltd said.

+ OTHER POST:

• The food crisis is getting worse, poor countries face the prospect of "eating every meal"(10.04.2022)
• The "pine" stock turned to rise above the historic peak, IDI set a "terrible" profit plan(10.04.2022)
• Case of 36 containers of cashew nuts out of control: Buyers are scammers(10.04.2022)
• Double benefiting from record exports and high selling prices, fertilizer stocks simultaneously set new peaks(10.04.2022)
• Collecting fees for seaport infrastructure in Ho Chi Minh City, businesses complain of exhaustion(01.04.2022)
• Bac Giang promotes to bring lychee to the US(01.04.2022)