LONDON: Aluminium prices rose for a second straight day on Thursday after news reports suggested that the United States could ban imports from Russia, a major producer.
The US threat comes as the London Metal Exchange (LME) considers blocking Russian metal from its trading system.
Russia produces around 6% of the world’s aluminium. When the United States sanctioned its major producer, Rusal , in 2018 and the LME barred its metal, aluminium prices jumped more than 30% in just a few days.
Benchmark aluminium on the LME was up 1.8% at $2,346.50 a tonne at 1607 GMT after rising 3.1% on Wednesday following news of the possible US import ban.
However, prices of the metal used in packaging, construction and transport remain down around 16% this year.
Tight supply is being offset by weakening demand as strict coronavirus controls hobble growth in China, and rising interest rates push Europe and the United States towards recession, said WisdomTree analyst Nitesh Shah.
“What’s driving metals are demand destruction fears as central banks tighten the screws,” he said.
Analysts at Citi said that “unless the US outright sanctions Russian aluminium producers, this rally is unlikely to be sustained.” In the wider market, global equities slipped to a two-year low.
Aluminium inventories in LME-registered warehouses rose to 351,900 tonnes, the highest since July, but have fallen from almost 2 million tonnes in March last year. In a sign that immediately available supply is tightening, cash aluminium on the LME has flipped from a discount to a $14.50 premium over the three-month contract. In other metals, LME copper was up 0.6% at $7,588.50 a tonne, zinc rose 0.9% to $2,935, nickel gained 0.7% to $22,450, lead added 0.9% to $2,042.50 and tin was up 1.7% at $20,160.
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