HIDING IN PLAIN SITE IN UK

Russian metal makes up 42% of LME warehouses’ stocks – report
Reuters | February 9, 2023 | 

Copper warehouse. (Stock image)

The London Metal Exchange (LME) on Thursday noted an expected rise in the share of Russian metal of the stocks in its warehouses, making up 42% of total stocks at 152,841 tonnes but remaining off historical highs.


Last year, the LME decided not to ban Russian metal from being traded and stored in its system because a significant portion of the market still planned to buy the country’s metal in 2023.


A new monthly report by the LME showed that as of Jan. 31, Russian aluminum amounted to 41% of the total at 93,750 tonnes, while copper was 94% at 54,950 tonnes and nickel was 16% at 42,774 tonnes.

“The LME’s conclusion (based on market feedback) that Russian metal continues to be consumed is supported by data on the outflow of Russian metal from LME warehouses,” it said.

“The LME believes that the evolution of Russian stocks is in-line with the market trends as anticipated.”

LME prices of copper and aluminum gained about 1% each on Thursday, while nickel surged 5.6%, buoyed by a slide in the dollar and hopes of demand recovering in China.

The Russia origin share of all three metals rose from October levels, with some traders deciding to refrain from buying Russian brands, the LME said.

However, while the level of Russian copper was just slightly below its historical high of 95% hit in September 2021, aluminum and nickel lagged record peaks by wider margins, the data showed.

The United States is considering raising the import tariff on Russian-made aluminum to 200%, as it seeks to ramp up pressure on Moscow over its war in Ukraine, but a decision has not been made yet, a US official said on Monday.

Most stocks of Russian aluminum were in Asian warehouses, with none in the United States, the LME observed “in the context of market speculation around potential US tariffs on Russian aluminum.”

(By Pratima Desai and Deep Vakil)

UK provides model for LME response to US aluminum tariffs
Bloomberg News | February 7, 2023 | 

Stack of raw aluminum ingot in cargo port. (Stock image)

As the US prepares to impose a punitive tariff on imports of Russian aluminum, traders will be watching for a response from the London Metal Exchange — the home of the global benchmark price. A recent precedent in the UK suggests any impact is likely to be minimal.


When the UK imposed tariffs on Russian metal last year, the LME responded by banning new deliveries of Russian metal into its warehouses in the UK. The move was largely symbolic, because there wasn’t any metal in UK warehouses produced by the affected brands.

The US is preparing to slap a 200% tariff on Russian-made aluminum as soon as this week to keep pressure on Moscow as the one-year anniversary of the invasion of Ukraine nears, Bloomberg reported on Monday.

Should the LME ban deliveries of aluminum into LME warehouses in the US, it would have little market impact, since almost all of the LME’s aluminum stocks are held in Asia. Out of global aluminum stocks of 390,200 tons, less than 1% is located in the US. What’s more, the LME’s off-warrant stock reporting on the LME-deliverable metal held outside its system similarly shows just 2,353 tons of off-warrant aluminum in the US.

An LME spokesperson said: “The LME has robust procedures and the necessary powers in place to take any action that may be required to ensure market stability in response to tariffs that impact the LME market.”

(By Jack Farchy)