Weekly Metals News Digest – April 15-19
US Sanctions Impact Russian Non-Ferrous Metals
US Treasury Implements Sanctions on Key Metals
The US Treasury Department has initiated a significant policy by banning the import of three non-ferrous metals from Russia: aluminum, copper, and nickel. This decision prohibits US companies from engaging in any buying or selling activities involving these metals both domestically and internationally. The sanctions extend to major trading platforms like the Chicago Mercantile Exchange (CME) and London Metal Exchange (LME), where an agreement has been secured with the UK Treasury Department to reject these metals for transactions.
Sanctions Designed to Disrupt Russian Export Revenues
The coordinated sanctions between the US and UK are strategically aimed at diminishing Russia's revenue from exporting these metals to the global market. However, there is a notable exception within the sanctions framework: metals produced in Russia before April 13 of the current year are exempt. This means that aluminum, copper, and nickel already stored in CME and LME warehouses or in transit at the time the sanctions were imposed are still eligible for trade.
China's Aluminium Production Surge
Increase in Production Amid Rising Prices
China has reported a resurgence in its primary aluminum production, reaching approximately 10.7 million tonnes at the end of the first quarter, marking a 6.8% increase from the previous year. The production spike continued into March, with a 7.4% increase, resulting in 3.6 million tonnes produced. This growth is attributed to the escalating global aluminum prices, which have recently surpassed $2,500 per tonne, and robust demand from sectors like construction, automotive, and packaging, spurred by recent governmental economic stimulus measures.
Market Dynamics Altered by Sanctions
The sanctions on Russian metal are poised to further bolster Chinese exports to Europe, particularly as the London Metal Exchange has stopped accepting new deliveries of Russian aluminum. However, Chinese producers face competitive pressure from Middle Eastern counterparts who benefit from lower electricity costs.
Discovery of Lithium in Appalachian Basin
Study Reveals Lithium in Pyrite
Researchers Shaylee Bhattacharya and Shika Sharma from the University of West Virginia have identified high concentrations of lithium in pyrite—a mineral compound of iron and sulfur found in shale and sedimentary rocks. This discovery presents a potential new unconventional source for lithium extraction, traditionally sourced from salt lakes, pegmatite deposits, and volcanic clays. Lithium extracted from pyrite could revolutionize its industrial usage, which has been historically limited to the production of sulfuric acid and certain types of cement.
Aurubis to Launch North American Plant
Expansion into US Copper Recycling
German metallurgical company Aurubis is set to inaugurate its first copper scrap collection and recycling plant in the USA by the end of December. With an investment of $700 million, the plant is supported by the US administration's "green new course" initiative. This facility is planned to process 90,000 tonnes of copper scrap annually, potentially doubling its capacity to 180,000 tonnes, marking Aurubis's expansion from its traditional European base to North America. The focus on recycling aims to produce pure copper with a reduced carbon footprint.
Umicore's Initiative in Recycled Precious Metals
Launch of Nexyclus™ Brand
Belgian company Umicore has introduced Nexyclus™, a new brand that specializes in recycled precious metals such as gold, silver, platinum, palladium, and rhodium. This initiative involves sourcing scrap metal from reliable suppliers, recycling it, and distributing the refined product globally. Each shipment comes with three types of quality assurance certificates, highlighting Umicore's commitment to environmental sustainability and alignment with the European Union's green industry policy.
Forecast: Implications of Sanctions on Russian Metals
Impact on Global Metal Markets
The ban on Russian aluminum, copper, and nickel, coupled with trading restrictions at major exchanges like the CME and LME, is expected to have profound effects on the global base metals market. Although the US imports minimal non-ferrous metals from Russia, the sanctions have already triggered a price hike in these metals globally, with costs eventually being passed on to consumers, including those in the US. With a significant portion of these metals stocked in LME warehouses, the reduction of available Russian metals will necessitate sourcing from other countries, likely increasing global prices further.
Geopolitical Shifts in Metal Supply
Russia is likely to redirect its metal exports from Europe to Asian markets, particularly to China, which remains a major consumer of Russian copper and nickel. However, the increase in Russian aluminum exports may face challenges as China already satisfies its demand with domestic production. Consequently, European markets are expected to turn to Asian suppliers, primarily from China and Indonesia, due to high energy costs in Europe which hinder local production of these essential metals. This situation will likely maintain Europe's dependency on imported non-ferrous metals for at least the next decade.
