Column: LME’s Russian aluminium dilemma set to become more acute – by Andy Home (Reuters – July 27, 2023)

The London Metal Exchange (LME) is coming under renewed pressure to exclude Russian aluminum from its warehouse system. Norwegian producer Norsk Hydro has called for the exchange to reconsider its decision last November to continue accepting deliveries of Russian metal.

With Russian brands accounting for 80% of warranted aluminum stocks at the end of June, the LME contract is at risk of losing its benchmark status, Hydro warned. There are no government sanctions on Russian aluminum and the LME said in response that “we note that all metals of Russian origin continue to be consumed by a broad section of the market.”

Russian producer Rusal has also hit back with its own warning that excluding its brands from the LME would be “highly destructive” to the market structure. The company said it “continues to witness a broad acceptance of its low-carbon aluminum to a wide range of global consumers from across the world.”

The problem for Rusal and the LME is that one of the biggest consumers – China – may be losing its appetite. Although there are no official sanctions against Rusal, the company’s geographical sales mix has shifted in response to punitive import duties in the United States and self-sanctioning by some consumers, particularly in Europe.

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