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Pressure is mounting on the London Metal Exchange (LME) to block Russian material from its system, with several producers calling publicly for action, which some consumer associations oppose.
Russia is a large producer of aluminium, copper and nickel. These have not been targeted by sanctions imposed after the Kremlin sent troops into Ukraine.
But the United States is considering restrictions on Russian aluminium and the LME, the world’s biggest and oldest metals trade hub, is asking its users if it should ban Russian metal.
The LME has set a deadline of Friday for responses, and some major names have taken their positions public.
Aurubis, Europe’s biggest copper producer, and Norwegian aluminium maker Norsk HydroNHY.OL this week called for action against Russian metal.
U.S. aluminium producer Alcoa AA.N, has said it is lobbying for a U.S. ban on Russian aluminium imports and for the LME to delist Russian brands.
Those wanting the LME to act say many metals users are avoiding Russian material and huge amounts of unwanted Russian metal could build up in the LME’s warehouse system, damaging its credibility.
“Quick action is required,” said Aurubis chief Roland Harings.
LME Chief Executive Matt Chamberlain said the exchange was monitoring levels of Russian metal and could take action if it thought there was a problem, without specifying what it might do. The LME declined to comment further.
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European industry associations representing aluminium users said restrictions against Russian metal would likely help the producers calling for them while exposing smaller consumers to restricted supply and higher prices.
“Those calling for such bans and sanctions have a vested interest in those measures that will benefit them at the expense of the vast majority of the industry,” five associations said in a statement.
Some producers are already charging more for their metal.
Chile’s Codelco, the world’s biggest copper miner, has agreed with European buyers a record-high premium of $234 a tonne over benchmark LME prices for deliveries in 2023, up from around $128 in 2022.
“Many European consumers don’t want Russian copper, they have to look elsewhere,” said a source familiar with the negotiations over premiums.
Prices of nickel, copper and aluminium shot up in the weeks after Russia invaded Ukraine on Feb. 24 due to fears of disrupted supplies.
Russian aluminium producer Rusal 0486.HK said the pressure for restrictions “looks increasingly like market distorting behaviour by some primary aluminium producers.”
It said it had “written in the strongest terms to the LME expressing concerns with the process and its ramifications for end users and global consumers,” adding that its aluminium “remains in demand and is approaching a full order book for next year.”
Asked this month if it could sue the LME, Rusal said it has considered “all possible options, including this one”.
The head of metals at exchange operator CME Group CME.O this week said it would not block Russian metal unless government rules made it do so.
Novelis, the world’s largest aluminium consumer, said it was working on its response to the LME. Wieland, a copper products maker, and Trimet Aluminium declined to comment.