Norsk Hydro asks LME to stop trading and storage of Russian aluminum
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Norwegian company Norsk Hydro has asked the LME to reconsider its decision not to ban the sale of Russian aluminum from its warehouses. Reuters with reference to a letter from the Norwegian manufacturer of this metal. Norsk Hydro also asked if the LME had consulted with the British Financial Conduct Authority (FCA) regarding the risks associated with the presence of Russian metal in warehouses and trading it through the exchange system.
According to the company, Russian aluminum accounted for up to 80% of all stocks of this metal on the exchange, compared to 68% in May, 41% in January and less than 18% last October. According to Norsk Hydro, the decision not to prohibit the storage of Russian aluminum in its warehouses threatens the basic status of LME metal contracts: some analysts estimate a discount for Russian aluminum at $100-300 per ton.
The company’s chief financial officer, Paul Kildemo, believes that the dominance of Russian aluminum in the system is a serious problem, since LME prices are the benchmark for contracts between producers, consumers and traders. “There is a risk that even more Russian aluminum will flow to the LME, which will put more pressure on the benchmark price … There is a clear risk that the LME-backed market becomes more and more unbalanced,” he was quoted by Reuters.
There are no international sanctions prohibiting the trade in Russian aluminum. And the leadership of the LME decided last year not to ban operations with aluminum of Russian origin. In response to a letter from Norsk Hydro, LME indicated that it continues to monitor the situation with sanctions around Russian metals. “We note that all metals of Russian origin continue to be consumed by a wide part of the market, and we will remain vigilant in this matter,” Reuters quoted the LME response as saying.
It was reported yesterday that primary aluminum reserves at the LME have grown significantly since the beginning of the year: 2.3 times, to 218,000 tons. However, stocks of aluminum alloys have halved to 200 tons.
Read more about the situation with Russian metals on the LME in the material “Russian copper leaves warehouses”.
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