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Metal Markets Melt Up Aluminium prices witnessed their largest intraday gain since the inception of the trading contract 37 years ago, primarily driven by new sanctions imposed by the UK and US against Russian metal supplies.
On Monday, aluminium prices soared by 9.4% during the trading day, closing at $2,562 per tonne.
The sanctions, announced late last week, directly target the trading of new Russian aluminium, nickel, and copper on two of the world's largest exchanges—the London Metal Exchange (LME) and the Chicago Mercantile Exchange.
These developments come as the LME and other exchanges struggle with high inventory levels of Russian metals, which have become less desirable in the market. The LME responded by stating that while Russian metals produced after April 13 would not be allowed in its warehouses, those produced earlier could still be stored but would be categorised separately.
Interestingly, despite the sanctions, Rusal, Russia's largest aluminium producer, claimed the measures would not impact its operations significantly. The company emphasised its robust global logistics and production systems that purportedly allow it to continue meeting international demand without interruption.
However, market analysts predict that the geopolitical tension might shift trade flows. Countries like China, India, and Turkey could become alternative markets for Russian metals shunned by Western consumers, potentially reshaping global trade dynamics in these critical industrial commodities.
Response from US Sectors: Here are the top and bottom performing US sectors, when aluminium prices have been above $2500/tonne.
The top 3 performing assets on a 1-month horizon:
S&P OIL GAS EXPLOR PROD: +1.78%
S&P Oil Equip: +1.76%
S&P Energy: +1.55%
The bottom 3 performing assets on a 1-month horizon:
S&P Homebuilders Select Industry Index: -2.38%
S&P Gold Miners: -1.54%
S&P Semi Select Industry Index: -0.93%