LONDON (Reuters) – The aluminium market has never experienced anything like it. Since the United States imposed sanctions on Russian oligarch Oleg Deripaska and United Company Rusal on April 6, aluminium has been in turmoil.
The London Metal Exchange (LME) price hit a six-year high of $2,340 per tonne last Friday. The weekly rally of nearly 12 percent was the largest since the launch of the LME’s high-grade contract in 1987.
Physical premiums in the United States are at three-year highs and the price of alumina is going haywire. The tremors caused by sanctions on the world’s largest producer outside China are still racing down multiple channels of a supply chain that has historically been defined by surplus metal.
Now, however, cracks in that supply chain are opening at alarming speed. Here’s where we are, one week and three days after the U.S. Treasury singled out Rusal and its owner for special sanctions treatment.
The LME three-month price is still motoring, touching a fresh high of $2,377.50 per tonne on Monday, extending the sanctions rally to $390.50 or almost 20 percent. Funds were the wrong way round when the sanctions news broke.