EU’s sanction on Russia heats up aluminium price in transnational market

European Union’s sanction against Russia has unfolded numerous speculations about future trade scope among countries and continents. The EU’s proposal states a one-year phase-in period, with 275,000 tonnes exempted during this transition. This would mean a further decline in the import of Russian primary aluminium. On the one hand, in 2023, 500,000 tonnes were imported from Russia into the EU, on the other, the figure declined to 330,000 tonnes in the period of January to November 2024. The ripple effect of the uncertainty around the trade front has inevitably hit the market pricing segment as well.

Pricing trend analysis

Aluminium prices hiked 0.18 per cent to INR 253.9 (USD 2.90), owing to supply concerns post the European Union’s (EU’s) decision to phase by phase ban Russian aluminium imports. In the meantime, the US Federal Reserve has not changed its interest rates, noting that cuts would only come when inflation and job data support easing. The Chinese market has remained shut for the Lunar New Year until February 5, limiting immediate demand signals from the world’s largest consumer. According to the International Aluminium Institute, global primary aluminium production rose 3 per cent Y-o-Y in December to 6.236 million tonnes. 

According to data published by the International Aluminium Institute, aluminium in China reached a high output of  44 million tonnes in 2024, approaching Beijing's 45-million-tonne cap set in 2017, which was aimed at curbing oversupply and achieving carbon reduction targets. December’s aluminium production totalled 3.77 million tonnes, marking a 4.2 per cent year-on-year increase, despite a 1.7 per cent month-on-month decline in daily output. However, rising costs have turned industry profits negative for the first time in three years, with average losses of RMB 687 per tonne, according to Antaike.

Japan’s aluminium stocks also heightened by 13.2 per cent month-on-month to 323,600 tonnes by the end of December, reflecting changes in global inventories.

Technically, the market is experiencing short covering, as open interest fell by 1.47 per cent to 3,747 lots. Support stands at INR 252.1 (USD 2.88), with a break below likely to lead to INR 250.3 (USD 2.86). Resistance is at INR 255.3 (USD 2.92), and a move above this level could push prices towards INR 256.7 (USD 2.94).