After two weeks of convulsions caused by U.S. sanctions against United Co. Rusal, the metals market was braced for more mayhem: many traders were betting the Russian aluminum giant was just days away from having to shut plants from Sweden to Jamaica.
Then on Monday, the U.S. Treasury threw a potential lifeline by making clear it’s not pushing for the company’s collapse. “The U.S. government is not targeting the hardworking people who depend on Rusal and its subsidiaries,” Treasury Secretary Steven Mnuchin said.
The Treasury softened its position in three ways. Mnuchin said it was considering a request to lift the sanctions against the company, it extended the period during which companies could keep trading with Rusal by almost five months, and it clarified exactly what dealings were permissible during that time.
Aluminum posted the metal’s biggest one-day drop since 2010 in London and the slide continued on Tuesday. Rusal’s shares jumped a record 43 percent in Hong Kong.
The violent reaction showed how far the sanctions had roughed up the aluminum market. As the biggest supplier of the metal outside China, Rusal found itself shut out of international markets and the impact had started to cascade through the entire industry: traders stopped buying Rusal’s metal, shipowners refused to carry its products and miners couldn’t supply its plants with raw materials.
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