Commentary: Relief for Rusal, but aluminium’s political risks remain – by Andy Home (Reuters U.K. – September 17, 2018)

LONDON The United States has thrown Russian aluminium company Rusal a lifeline by loosening sanctions imposed on the company in April. Critically, the U.S. Treasury has tweaked its sanctions to allow Rusal to enter into new contracts with existing customers.

This is good news for the Russian company, which has been shunned by buyers negotiating 2019 shipments. It’s also good news for the aluminium market, which was facing the prospect of 3.7 million tonnes of Rusal product being locked out of the supply chain.

However, the broader sanctions threat against Rusal, a by-product of the sanctions against its oligarch owner Oleg Deripaska, remains. An Oct. 23 deadline for customers to wind down business with the company still stands, leaving any new contracts still beholden to the same underlying uncertainty about when sanctions will be fully lifted.

And even if sanctions are eventually removed, political risk is not going to disappear any time soon from the aluminium market.

Relations between the United States and Russia, the world’s second largest producer of the metal, remain strained, to say the least. Relations between the United States and China, the world’s largest producer, are deteriorating by the day as the drums of trade war beat ever louder.

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