The decision by the UK and the US to ban the trade of Russian metals has led to a significant increase in aluminium prices, driven by efforts to curb financing to the Russian war machine.
Record Spike in Aluminium Prices
Following the announcement of the ban, aluminium prices experienced a historic surge, reaching record levels on the London Metal Exchange. At one point during early trading, aluminium prices soared by over 9%, marking the largest rise observed since the exchange’s inception in 1987.
Impact on Nickel Prices
Nickel prices also saw a notable increase, rising by more than 8% at one stage. However, both aluminium and nickel prices later retreated from their peak levels.
Sanctions Aimed at Restricting Russian Financing
The UK and US imposed sanctions on new production of aluminium, copper, and nickel in an effort to limit financial support to Russia’s war efforts. British Chancellor Jeremy Hunt emphasized the intention to prevent further funding of the Kremlin’s military activities.
Potential Economic Implications
Aluminium is widely utilized in various industries, including automotive, aerospace, and electronics manufacturing. A sustained increase in aluminium prices could lead to broader economic effects, potentially contributing to inflationary pressures. However, analysts from Goldman Sachs suggest that the ban is unlikely to disrupt the overall supply of metals, as Russian producers can still access non-UK/US markets.
SOURCE: Ref Image from Market Watch
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