A dramatic shift in the origin of aluminium stockpiled in the London Metal Exchange (LME) warehouses has taken place, with Russian metal now dominating the stocks. At the end of December 2023, a staggering 90 per cent of the aluminium stored in the LME was of Russian origin, according to the exchange's latest data. This marks a significant increase from less than 10 per cent before the Ukraine-Russia geopolitical crisis began to nearly 80 per cent at the end of November.
The data reveals that the entirety of the increase in LME aluminium stocks in December came from Russian metal. This sudden surge raises questions about the potential impact on global aluminium supply chains and pricing, with potential implications for industries that rely heavily on the metal.
The reasons behind this drastic shift are likely complex and multifaceted. It could be due to sanctions imposed on Russia, logistical challenges, or market speculation. Further analysis and monitoring of the situation are necessary to understand the full implications of this trend.
As a result of the newly implemented British sanctions against Russia's metal industry, LME aluminium stockpiles increased by more than a quarter over the past month.
Russian aluminium's growing share on the LME could eventually lead to the exchange acting. However, for now, the expectation is that the LME will take no action unless governments adopt targeted sanctions. The LME had previously said that it would be guided by the extent to which Russian metal continues to be consumed by physical market participants. Aluminium has had a disappointing start to 2024, with LME prices falling more than 6 per cent this year.
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