US Mulling Sanctions against Russian Aluminium Could Aggravate Chaos in Global Aluminium Supply

SHANGHAI, Oct 14 (SMM) - The U.S. is considering a blanket ban on Russian aluminium, which could upend the global aluminium market already affected by multiple disruptions. The Biden administration is considering options including sanctions on Russia’s largest aluminium producer, and the White House is considering punishing it for a military escalation of the Russia-Ukraine war, according to people familiar with the matter. The measures will add to this year's turbulence in aluminium prices, supply changes and demand volatility.

Goldman Sachs analysts including Nicholas Snowdon wrote: "If sanctions are imposed on Rusal, Western aluminium markets will face extreme tightening and prices will rise sharply."

Sanctions on Rusal would be the most consequential of the options under consideration, along with a U.S. ban on imports of Russian aluminium or punitive tariffs on Russian aluminium products.

Aluminium prices soared to record levels in March after the Russian-Ukrainian war broke out, but have retreated as Russian metal has largely continued to flow into global markets. The energy crisis in Europe has also hit demand, with European smelters shut down and the London Metal Exchange (LME) having separate discussions on banning the new Russian metal from its warehouses.

The Chaos Research Institute wrote: "The worst case scenario is that Europe and the United States will block Russian aluminium. It is highly likely that the stranded Russian aluminium will go to China, India and elsewhere, which will then export aluminium products to Europe and the United States to fill the gap. "