Metal Traders Brace for Dramatic Moves as London Metal Exchange Bans Russian Supplies

-- Metal traders are bracing for dramatic moves after the London Metal Exchange responded to new US and UK sanctions by banning deliveries of any Russian supplies produced after midnight on Friday.Most of the two dozen market participants interviewed by Bloomberg expect prices of aluminum, copper and nickel to jump when LME trading reopens on Monday morning at 1 a.m. London time.

But traders and executives said that the new restrictions were unlikely to have as dramatic an impact as those two events. The LME on Saturday confirmed that “old” Russian metal can continue to be delivered, though the exchange said it would require evidence that the metal was not in breach of sanctions and would approve deliveries on a case-by-case basis.

Russian metal already accounted for 91% of LME aluminum stocks at the end of March, 62% of copper and 36% of nickel. Traders are now expecting a wave of deliveries of Russian material that was being held outside the LME system, which could now be dumped onto the exchange as its owners worry about the prospect of future restrictions.

For its part, the LME considered banning Russian metal in 2022 and decided against it, arguing that it was still being consumed in the physical market and it wasn’t the exchange’s place to act over and above the requirements of sanctions. When markets open in a few hours’ time, traders say they expect copper, aluminum and nickel to react in distinct ways. The price reaction is likely to be most extreme in nickel, said Colin Hamilton, managing director for commodities research at BMO Capital Markets.

Metal Traders London Metal Exchange Russian Supplies Sanctions Aluminum Copper Nickel Price Jumps Market Implications

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