In a recent survey, it was established that commodity trader Glencore made significant deliveries of Russian-origin aluminium to London Metal Exchange (LME) registered warehouses in Gwangyang, South Korea.
These deliveries shed light on the challenges faced by Rusal, the world's largest aluminium producer outside China, particularly as contracts for 2022 expire and concerns over the source of aluminium mount for 2023 contracts.
Glencore's role in the international aluminium industry
Glencore, a prominent player in the global commodities market, has been pivotal in the aluminium industry, particularly in its partnership with Rusal. This collaboration involves a long-term contract for the supply of millions of tonnes of aluminium, highlighting Glencore's significant position in the aluminium supply chain.
The recent deliveries of Russian-origin aluminium to LME warehouses underscore the dilemma confronting Rusal amidst geopolitical tensions. With buyers expressing reluctance to engage with Russian metal for future contracts, Rusal finds itself grappling with unwanted aluminium, often ending up in the LME system as a last resort for both consumers and producers.
What does the US Government think?
The Biden administration's contemplation of restrictions on Russian aluminium imports in response to heightened military activities in Ukraine has sent shockwaves through the aluminium market. This uncertainty has triggered a notable spike in aluminium prices, driven by concerns over potential shortages should Rusal face sanctions.
Aluminium traders are closely monitoring the situation, recognising the significant role Rusal plays in the global aluminium supply chain. The recent increase in aluminium stocks in LME warehouses further highlights the evolving dynamics and challenges facing the industry.
Looking ahead, the possibility of a ban on Russian aluminium, nickel, and copper trading and storage in the LME system looms large. The launch of discussions on this matter signals a potential shift in the market landscape, with implications for key players like Rusal and its partners.
If you wish to learn more about the international aluminium sector in proper details, please have a look at AL Circle’s special report, Global Aluminium Industry Key Trends to 2030.
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