Banning Russian Aluminum Would Create Uncertainty About LME’s Role -Rusal

LONDON, Oct 5 (Reuters) – Rusal’s metal ban will fuel volatility in London Metals Exchange aluminum contracts and create uncertainty about the exchange’s role in the metals industry, the government said. aluminum giant in a letter seen by Reuters.

Last week, the world’s largest and oldest metal trading market said it was considering a consultation on whether Russian metal should continue to be traded and stored in its system. Read more

The letter to “partners” states that if there is consultation, Rusal will highlight potential impacts such as disruption to the aluminum supply chain due to a “potential change in regional delivery dynamics “.

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Rusal, the world’s largest aluminum producer outside China, is expected to account for 6% of global metal supply this year.

Rusal’s exclusion of the metal could mean “increasing market volatility due to restrictions on the physical liquidity pool on the LME,” says the letter emailed to “partners” on October 5.

“(A ban would) create uncertainty about the LME’s role in the market due to a waiver of applicable laws, thereby making the exchange less attractive to all participants.”

This, Rusal said, would create liquidity problems and risk management issues for all segments of the aluminum industry.

Aluminum industry sources said there was some concern that Rusal would not be able to sell its metal and would deliver it to the registered warehouses of the 145-year-old metal exchange.

“We can categorically confirm that there are no plans to do so, as we remain focused on executing our current activities, activities secured for 2023 and activities being finalized,” the letter said.

“Further, Rusal also notes the alarmist views expressed by other interested parties which also contain unsubstantiated statements that we believe are detrimental to the maintenance of an orderly market.”

Rusal said in a separate statement on its website that its sales book is strong and the company has no need to deliver metal to LME warehouses.

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Reporting by Pratima Desai and Polina Devitt; edited by David Evans and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

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