LME to reassure the market: there are no plans to ban Russian metals trading

(LME), the London Metal Exchange, said on Tuesday that it had no plans to ban metals from Russian producers, such as nickel and copper from Norilsk Nickel (Norilsk Nickel), or aluminium from Rusal (Rusal) (00486.HK.

Russia is an important metal producer, supplying 10 per cent of the world's nickel, 6 per cent of aluminium and about 3.5 per cent of copper, and the ban on Russian metals could lead to shortages at a time of rising global inflation, triggering a further surge in prices.

Although Western sanctions against Russia have been increasing since the escalation of the conflict between Russia and Ukraine, Russian metals have not been subject to sanctions so far.

"there are no plans to take independent action outside the scope of the sanctions, for example, to restrict the flow of Russian-made metals within the LME system," LME said. "our first priority is to maintain an orderly market that benefits all market participants, so we will continue to review this decision and ensure dialogue with governments as the situation develops."

Analysts and traders widely believe that if LME suspends new Russian metals trading, it is bound to add script to the banned supply situation and push prices sharply higher, similar to LME's decision to cancel the deal after the US Treasury imposed sanctions on Rusal in 2018, followed by a 30 per cent rise in aluminium prices in a short period of time.

The industry has called for a trading ban

The LME Copper Commission, made up mainly of producers, consumers and brokers, voted last week for LME to ban Russian copper from its systems, according to media sources.

But people familiar with the matter point out that if there are no sanctions against Russian producers in the west, the ban could prove illegal, meaning that the LME may be at risk of being sued by the affected party, and that the Copper Commission is only an advisory committee that can only advise LME on what to do.

Some in the market support banning Russian metals out of political positions, but others do not, arguing that higher copper prices will generate more revenue for the industry, a prospect that led them to make the decision.