As the year draws to a conclusion, memories of the volatile months of February and March. When Aluminium prices rose to record highs due to concerns that Russian supplies would be permanently removed from the market, are becoming more and more prevalent. While though the price of all commodities is well below those levels. In some cases is even down year over year. Every now and then we are reminded of how complacent the market has gotten with regard to the continuous supply of Russian commodities.
Why Prices have increased?
The exchange intended to discuss a potential ban on new Russian metal supplies. Aluminium prices on the London Metal Exchange soared by a record 8.1%. The most significant intraday increase in base metal prices ever occurred, sending the price of a tonne to $2,305. In response to market concerns that an impending recession will cause demand to collapse. Nickel rebounded 5%, and zinc gained more than 4%, containing steep losses for industrial metals thus far this month.
The London Metal Exchange (LME) “plans to produce a discussion paper on whether and under what conditions it might restrict new supply of Russian metal from being supplier to its network of warehouses“.
Russia is a major producer of aluminium, nickel, and copper, any action by the LME to restrict supplies might have a huge impact on the world metals markets.
LME Parameters on Sanctions
Russian nickel exports from Russia may be affected by sanctions. Which led to a significant short squeeze on the LME in March.
Launching a discussion paper signals a change in strategy, Even though it doesn’t mean the LME has decided what it will do. The exchange had previously stated that it had no plans to move outside the parameters of the sanctions. Which have mostly had no impact on major Russian metal manufacturers like Rusal and Norilsk Nickel.
The bourse stated in a statement on Thursday that “the LME continues to take the necessary action to ensure market stability in response to sanctions.” The LME stated that it emphasises a “orderly market” and will continue to monitor the situation