According to market news on April 13, the United States and the United Kingdom announced new trading restrictions on Russian aluminum, copper, and nickel. The new rules prohibit the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) from accepting newly produced metals from Russia. Russian aluminum, copper and nickel produced on or after April 13 are among the banned...
Subsequently, the LME also issued an announcement, stating that the LME would issue trading guidelines for Russian metals after they were sanctioned by the UK before 11 o'clock on April 14. This article will sort out the current background and potential risks based on the existing data of SMM. According to market news on April 13, the United States and the United Kingdom announced new trading restrictions on Russian aluminum, copper, and nickel. The new rules prohibit the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) from accepting newly produced metals from Russia. Russian aluminum, copper and nickel produced on or after April 13 are all banned. Subsequently, the LME also issued an announcement, stating that the LME would issue trading guidelines for Russian metals after they were sanctioned by the UK before 11 o'clock on April 14. This article will sort out the current background and potential risks based on the existing data of SMM.
What deserves the most attention from the market is nothing more than how much impact will this round of sanctions have? The first is the ban currently announced by the United States on the import of these three metals from Russia. After the outbreak of the Russia-Ukraine conflict, the United States has imposed sanctions on Russia, and the intensity and scope of the sanctions have gradually increased. However, according to SMM statistics, since March 2023, the amount of nickel metal exported by Russia to the United States and related allied countries has been 0. From the perspective of trade flows, Russian nickel metal is currently not dependent on the U.S. market, and based on current data, U.S. individuals and entities are not affected by restrictions on the purchase of Russian metal. On the other hand, Russia's main export destination is still China, followed by the Netherlands. Exported to China because China is one of the world's largest consumers of nickel metal, and exported to the Netherlands because the Netherlands has the most important LME nickel delivery warehouse in Europe.
According to SMM statistics, the current LME nickel inventory is 75,516 tons, and Russian nickel accounted for 36% of the total LME warehouse receipts in March, the largest proportion of LME inventory. According to SMM estimates, Russian nickel accounts for more than 30% of overseas (excluding China) pure nickel production, and global pure nickel production accounts for more than 20%. This means that Russian Nickel is one of the world’s leading suppliers of pure nickel. And among all deliverable brands in the LME, Russian Nickel’s deliverable production capacity accounts for about 20%. This means that Russian Nickel is one of the world’s leading suppliers of pure nickel. And among all deliverable brands in the LME, Russian Nickel’s deliverable production capacity accounts for about 20%. To sum up, in fact, the impact of sanctions on Russian nickel in the US market is relatively limited. What is more worthy of attention is whether it will affect the delivery of Russian nickel on the LME.
Returning to the topic of deliverables, we have to mention that with the production ramp-up progress of domestic electrolytic nickel, the current capacity of LME’s new domestic nickel plate delivery brand has been expanded to 121,600 tons, including DX- which is under application. The 50,000-ton production capacity of CNGR brand nickel plates is expected to expand to 171,600 tons of new delivery product capacity from 2023 to the present. On the surface, this part of the new delivery capacity can already meet more than 70% of the delivery volume of Russian nickel. However, it should be noted that the new domestic delivery products are facing export problems. Although most domestic electrolytic nickel manufacturers are currently able to export overseas through supplied materials processing manuals, as a strategic resource, it is worth noting whether metal nickel can be exported in a long-term, large amount and stably in the future. On the other hand, according to the information currently learned by SMM, the export manuals approved by some companies do not match the registered volume of LME.
To sum up, it is still necessary to track the guidance document that the LME will release before 11 o'clock on the 14th, and whether it affects the delivery attributes of Russian nickel is the focus of attention at present. In the future, SMM will continue to track the current round of sanctions on Russian metals in the European and American markets.
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