Posted on 15 Apr 2024
The London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) can no longer trade Russian nickel, copper and aluminium, Kallanish reports.
After market close on Friday, the UK and US treasury departments announced further measures to reduce Russian revenue from metals effective on 13 April. The coordinated action builds on the ban of metal imports targeting $40 billion of Russian exports of nickel, copper and aluminium.
The UK had already sanctioned Russian-origin oil, gas, gold, diamonds, iron, steel and base metals, while the US had put in place tariffs on various Russian metal imports. Now, the US is banning the import, sale and re-export of the metals. The governments claim they are constraining Russia’s ability to make money “dealing another blow” to President Vladimir Putin’s funding for the war in Ukraine.
In a late statement on Friday, the UK government said: “Today’s action brings the world’s two largest metal exchanges into the scope of existing bans… Metals are Russia’s largest export commodity after energy, though their value has been decreasing since Russia’s invasion of Ukraine.”
“By taking this action in a targeted and responsible manner, we will reduce Russia’s earnings while protecting our partners and allies from unwanted spillover effects,” says US Treasury Secretary Janet Yellen, without elaborating.
Kallanish understands the sanctions do not cover titanium or platinum group metals such as platinum and palladium “due to supply chain sensitivities.” Additionally, the new restrictions do not apply to existing stockpiles of Russian metals already on exchange, to prevent market disruption.
The LME notified members, warehouse companies and London agents late on Friday that it will publish guidance related to the UK sanctions “as soon as practical.” This notice is expected no later than 11:00 on Sunday, 14 April, to allow review time for market open on 01:00 15 April.
It said it “reflects all relevant sanctions and tariffs in its operations, and so will take steps – in collaboration with LME Clear – to implement these sanctions for its own operations, and the operation of its market.”
The CME could not be reached for comment.
The new prohibitions are likely to impact the battery supply chain, potentially providing upside for nickel and copper prices. With further supply restrictions, copper prices are likely to continue its recent rebound. For nickel, the outlook may still be tricky given the LME has been gradually increasing the volume of nickel from Indonesia in its warehouses. With the ban on Russia-origin nickel, Indonesian material could increase on the LME, despite growing opposition from some market players.
Source:Kallanish
