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Sanctions fallout upends metals as aluminum, nickel burst higher

  • Friday, April 20, 2018
  • Source:ferro-alloys.com

  • Keywords:section,upends,metal
[Fellow]Sanctions fallout upends metals as aluminum, nickel burst higher

[ferro-alloys.com] The turmoil unleashed by U.S. sanctions against United Co. Rusal kept reverberating through metals markets, sending aluminum and nickel to multi-year highs.

Commodities markets have been rocked for the past two weeks by the clampdown on Russia’s Rusal, the largest aluminum supplier outside China, setting off a rush for alternative supplies and stirring concern that further U.S. action could affect other markets like nickel.

Aluminum rallied as much as 7.1 percent, a record intraday gain, to $2,718 a ton in London. Since the start of April, prices are up more than 30 percent.

Nickel surged to a three-year high as traders speculated that other major mining companies could face the ire of U.S. officials. Prices climbed as much as 9.3 percent to $16,690 a ton on Thursday, before paring gains to 3.3 percent.

"It really is unprecedented,” said Keith Wildie, head of commodity volatility at London-based brokerage Vantage Capital Markets, who has more than 20 years’ experience in the industry. “I certainly can’t remember a time in base metals where the markets have been moving like this.”

The U.S. sanctions are upending the global supply chain for aluminum, which is used in planes made by Boeing Co. and Ford Motor Co. trucks. Rusal is the world’s biggest producer outside China, supplying about 6 percent of the world’s aluminum. It operates mines, smelters and refineries across the world from Ireland to Jamaica.

“It’s a market in a clear state of panic and uncertainty,” according to Vantage Capital Markets’ Wildie. “Like all periods of market dislocation, eventually it will pass, and the key question now is whether we’re approaching that point. My gut feeling is that we probably are.”

Rusal officials met Chinese companies and traders this week to discuss the possibility of selling output in the Asian country, while buying alumina, according to people with knowledge of the talks.

“The aluminum price move is justified,” said Colin Hamilton, managing director of commodities at BMO Capital Markets Ltd. in London. “In nickel, I think it’s a misinterpretation.”

  • [Editor:王可]

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