Aluminum rose again after a strong jump on Thursday due to the impact of a possible ban on the London Metal Exchange to export Russian metal.
Aluminum is up for the third day in a row after a record gain of 8.5% after it was reported that the exchange plans to start a discussion paper on the possible blocking of new deliveries of Russian metal to its warehouses.
Any action by the LME to cut off supplies from Russia could have serious repercussions for global metals markets, as the country is also a major producer of vital materials, including nickel and copper.
Aluminum will be hit the hardest, as about half of Europe’s smelting capacity has already been reduced by record electricity prices due to the military conflict. A potential ban will add to trading volatility after the metal has experienced a strong sell-off in recent weeks amid growing fears of a global recession.
The possible ban has heightened concerns about a possible shortage of aluminum, however, the LME will be trying to avoid a repeat of the same squeeze that hit nickel so far.
Goldman Sachs downplayed the likelihood of such a ban and said pressure on metal prices would not increase due to weak physical demand in Europe.
In terms of demand for industrial metals, including copper, China’s manufacturing activity continued to decline in September, due to lockdowns in major cities and the continued downturn in the real estate market.
Aluminum added 1.6% to $2,232/t on the LME as of 7:55 am local time, marking a weekly gain of about 3% after four weeks of losses. Prices for other base metals were higher, with copper up 0.2% and zinc almost 2%.
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