The US and UK have introduced restrictions on trading of new Russian aluminum, copper and nickel on the LME and Chicago Mercantile.
Exchange.
The restrictions apply to metal produced after April 12, as pre-existing stocks are exempt from these sanctions. The sanctions are designed to limit Russia’s income from the export of metals produced by companies such as Rusal and Norilsk Nickel.
The US Treasury and UK government have banned the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) from accepting any new aluminum, copper or nickel products from Russia.
Reacting to the news, Jefferies analysts said they expect the ban to have the “most significant impact on aluminum prices” but they also believe it will also “likely lead to higher copper and nickel prices.”
“This should be most positive for aluminum stocks such as Alcoa (NYSE:),” Jeffries added.
Meanwhile, analysts say the net impact is positive for fixed prices for primary aluminium, copper and nickel traded on the LME as it shifts the previous discount to new Russian units of these metals on the OTC market and creates vulnerability to a near spread tightening due to future inventory cancellations. .
“However, these measures do not specifically target physical trade of units outside the LME warehouse system, which should mitigate the magnitude of price impacts,” they wrote. “We believe that these measures are intended (and will) contribute to increasing discounts on new Russian metals compared to world prices by limiting the possibilities of their sale and financing.”