Bloomberg reports that metals whipsawed as sanctions on new Russian supplies rattled the LME. They write:
Metals swung sharply, with aluminum surging by a record before later erasing most of its gains, as traders digest US and UK sanctions that banned delivery of new Russian supplies onto the London Metal Exchange.
The curbs on aluminum, nickel and copper announced late Friday don’t prevent Russia from selling its metals to buyers outside the US or UK, and don’t restrict the vast majority of the global trade in metals — which takes place directly between miners, traders and manufacturers rather than through the exchange.
But the sanctions will still reverberate through metals markets because of the LME’s central position at the heart of the industry. Its prices are used as a benchmark and referenced in a huge number of contracts around the world, and many buyers view the ability to deliver on the LME as essential. […]
Russia already accounted for 91% of LME aluminum stockpiles at the end of March, 62% of copper and 36% of nickel. In its notice on Saturday, the LME acknowledged the possibility that the uncertainty caused by the sanctions means “a relatively large supply” of Russian metal could flood onto the exchange.
Estimates of the amount of Russian aluminum being held outside of the LME system range from a couple of hundred thousand tons to as much as one million tons.
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