From April 13th onwards, metals such as nickel, aluminium and copper produced by Russia will not be eligible for delivery to the London Metal Exchange (LME) or the Chicago Mercantile Exchange (CME), restricting them from accepting fresh supplies from Russia.
Russia accounts for about 6 percent of world nickel production, 5 percent of aluminium, and 4 percent of copper. It is the world’s second-largest producer of refined class 1 nickel after China, the only type that can be delivered on the LME, where Russia is an even larger source of supplier.
At the end of March, Russian metal accounted for 36 percent of nickel, 62 percent of copper, and 91 percent of aluminium in LME warehouses, according to a few sources.
To comply with new US and UK sanctions implemented in response to Russia’s invasion of Ukraine, the LME banned Russian metal produced on or after April 13th from its system.
The US Treasury Department and the British government on Friday restricted the 147-year-old LME and CME from receiving new Russian aluminium, copper and nickel beginning from April 13th.
The ban seeks to restrict Russian President Vladimir Putin’s access to financial resources generated from the export of metals produced by companies such as Rusal and Nornickel, which supports to fund its military operations in Ukraine.
However, the CME Group has suspended only the Russian-produced aluminium from its platform following the new sanctions imposed by the US and Britain on Moscow for its invasion of Ukraine.
Though the US has barred imports of the aforementioned Russian metals, palladium and titanium, for which Russia is a key supplier, are exempt from these restrictions.
The Nifty Metal index fell by 2.3 percent at the opening of the trading day on Monday, reaching an intraday low of 8,744.8 points. However, after a few hours of trading, the index recovered sharply, gaining 1.22 percent to hit an intraday high at 9,060.8 points, and recovered by around 3.6 percent from the day’s low.
On Tuesday, the index experienced a decline by 1.1 percent in the early trading session to 8,800.55 points, compared to its previous closing of 8,899.7 points, but then rebounded by 0.8 percent to 8,968.25 points.
This recovery of the metal stocks in recent weeks might be a result of a global surge in metal prices, including copper, zinc, aluminium, lead, and steel, which is attributed to the resurgence in global manufacturing activities.
Share price of Hindustan Copper Limited climbed 4 percent to Rs. 368 on the morning trading session of Tuesday, compared to its previous closing price of Rs. 353.9.
Aluminium manufacturers Hindalco Industries Limited and National Aluminium Company Limited (NALCO) increased by nearly 1.43 percent and 1.7 percent, respectively, as global aluminium prices soared after new US and UK restrictions on Russian metals.
Written by Shivani Singh
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