The European Union and United States have ramped up buying key industrial metals from Russia, data showed, despite logistical problems spurred by the war in Ukraine and tough talk about starving Moscow of foreign exchange revenue.
The metal shipments highlight the West’s difficulty in pressuring Russia’s economy, which has performed better than expected and seen its rouble currency surge as buoyant oil revenue has helped offset the impact of sanctions.
EU and US imports of Russia’s main base metal products aluminium and nickel during March-June increased by as much as 70%, official trade data compiled by Reuters from the United Nations Comtrade database show.
The total value of EU and US imports of the two metals from March to June were $1.98 billion, the data showed.
The West has imposed repeated waves of sanctions on a wide range of Russian products, people and institutions, but has largely spared the industrial metals sector.
A US State Department spokesperson said in response to a query from Reuters: “Although we don’t preview our sanctions actions, nothing is off the table to increase the price on Putin’s unjustified war against Ukraine.”
The European Commission did not provide a comment after a request.
Analysts said the United States and Europe have learned lessons after huge disruption on construction, auto and power sectors caused by sanctions imposed by former US President Donald Trump on Russian aluminium 2018.
Those sanctions were lifted the following year.
Prices of both metals surged to record peaks shortly after Russia launched its invasion of Ukraine on Feb. 24 on fears that sanctions or difficult logistics would block shipments.
But those fears were unfounded, since the data show Russian exports during March to June were relatively strong.
“Market mechanisms are working,” said Julius Baer analyst Carsten Menke, referring to Russian metals shipments.
“We know from commodity traders it’s mainly a question of the price. It’s not so much about some politician not wanting you to buy, but is there a deal here.”
Russia’s Rusal is the world’s largest aluminium producer outside China and accounts for about 6% of estimated world production.
During the four months following Russia’s invasion of Ukraine, the EU was the biggest importer of unwrought aluminium from Russia, pulling in an average of 78,207 tonnes a month in March-June, 13% more than the same period last year.
Rotterdam, Europe’s largest port, said in a report total volumes rose 0.8% in the first half of 2022, but “break bulk” - cargo that does not fit in containers — rose sharply by 17.7%, driven by higher imports of metals.
A port spokesperson told Reuters that shipments of aluminium and nickel were still arriving in the port since they are not sanctioned, but declined to give any figures.
A division of Norway’s Norsk Hydro said it would exclude Russian metal from deals to buy aluminium for 2023.
US monthly imports of Russian aluminium averaged 23,049 tonnes in March-June, up 21% from the same period last year.
“For the Americans, it’s very important that they get as many different aluminium sources as possible,” said Tom Price, head of commodities strategy at Liberum.
“They’re very reluctant to get any metal from China, where exports are shrinking, so Russian Rusal aluminium is very important, which is why they haven’t shut that trade down.”
Overall shipments have been relatively steady.—Reuters
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