What happens when United Company Rusal. the second largest Aluminum company in the World, is blacklisted from American-financial markets? Prices fly and supply chain managers across the World scramble to secure as much Aluminum as they can as quickly as they can.
Rusal, a Russian-owned company, with strong ties to President Putin, has recently had it’s access to US-credit restricted as part of Trump’s latest round of Russian sanctions. As the second-largest producer of alumina, a key component to producing Al ingot, they account for approx. 9% of the World’s supply. Without the alumina mined by Rusal, Aluminum-ingot production could stifle, driving prices even higher still.
Primary Al Prices Highest in Six Years
The price of primary Aluminum on the London Metal Exchange (LME) has increased $0.25/lb since April 6th. This was the date the US slapped sanctions on several Russian oligarchs, officials, businesses and agencies, including Deripaska’s Rusal. This has driven prices to their highest since 2011. Additionally, China’s economy recently posted a Q1 growth rate of 6.8%, beating their 6.7% projections and indicating the economy is continuing to hum along as consumer spending increases. This is putting upward pressure on Al demands, creating a double-whammy affect for consumers.
A 28% Increase!
While this is great news for those who sell a direct substitute for primary aluminum ingot (scrap metal recyclers), it could seriously disrupt manufacturers’s ability to maintain a steady supply of raw materials.
Companies like Boeing and Ford, who use large amounts of Aluminum in the manufacturing of their airplanes and F-150 line of trucks, will be paying much more to keep their assembly lines running.
Check out our Metal Market Charts to see metal pricing trends for the past 6-months, 90 and 30-days.
For additional information about this story, visit Bloomberg at https://www.bloomberg.com/news/articles/2018-04-18/metals-gripped-by-turmoil-as-rusal-s-sanctions-fallout-spreads