Column: LME checks Russian aluminum play but is it game over? – by Andy Home (Reuters – May 7, 2024)

The London Metal Exchange’s (LME) warning shot to those looking to game the new sanctions on Russian aluminum appears to have worked, for now at least. Traders swooped on the LME’s stocks of Russian brand aluminum after the US and UK governments banned exchanges from taking delivery of Russian metal produced after April 12.

Over half of registered tonnage was cancelled over the ensuing week, destined for a creative run-around that would see it re-warranted under more restrictive trading conditions and locked into a lucrative rent-sharing warehouse deal.

A significant amount of that cancelled stock was moved back onto LME warrant last week after the exchange tweaked its new rules around Russian metal delivery. The physical liquidity boost has calmed time-spreads, the benchmark cash-to-three-months period returning to contango.

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