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Russian aluminium is dividing the metal industry as producers and consumers meet this week to work out supply agreements for next year.
Some industrial consumers have refused to buy supplies from Russia because of Moscow’s invasion of Ukraine, but others argue that this is wrong when sanctions do not apply to a company or its metal.
The debate over banning Russian metal is likely to resurface in Barcelona this week, after Norwegian producer Norsk Hydro in July urged the London Metal Exchange (LME) to reconsider its decision not to ban aluminium from Russia.
Some aluminium consumers are sending requests for quotations for contract supplies for 2024, specifically excluding Russian metals. However, leading Russian producer Rusal, which accounts for 6% of global supply, says many Asian and European consumers continue to buy its material.
Last month, Rusal said it had increased sales in Asia and that Europe remains a key market, with more than 30% of revenue in the first half of 2023. Five European industry associations called on the LME to ignore the ban requests and Rusal criticised rival Hydro, saying it was aiming to destabilise the market for its own benefit.
Stocks of Russian-origin aluminium in LME-approved warehouses available for the market rose to 81% of the total in August this year, up from 41% in January.
As some consumers avoid Russian metal, more material has flowed into China. The share of Russian metal in China’s total raw aluminium imports rose to 46% in the first seven months of this year, from 27% in the whole of 2022.
% Russian Aluminium in LME Warehouses
Industry participants in Barcelona will also be looking for signals on the demand outlook as weak global growth and steady production in China weigh on prices.
The benchmark price of light metal used in transport, construction and packaging has fallen eight per cent this year, pressured by concerns over slow growth in China, the main consumer, and interest rate hikes elsewhere.
Aluminium – 3 month $/ton daily
