Russian aluminium splits dealmakers at Barcelona metals meet

By Eric Onstad

BARCELONA (Reuters) – Russian aluminium is dividing the metals industry as producers and consumers gather this week to hammer out next year’s supply deals.

Some industrial consumers have refused to buy supplies from Russia over Moscow’s invasion of Ukraine, but others argue that is wrong when sanctions do not apply to a company or its metal.

Debates over banning Russian metal are likely to resurface in Barcelona this week after Norwegian producer Norsk Hydro in July urged the London Metal Exchange (LME) to reconsider its decision not to ban aluminium from Russia.

The Fastmarkets International Aluminium Conference, which begins on Wednesday, takes place during the market’s “mating season”, when companies seek to lock in supply deals.

“I think self-sanctioning has increased from last year,” said Duncan Hobbs, research director at Concord Resources.

“Some aluminium consumers are putting out requests for quotations for contracted supplies for 2024, specifically excluding Russian metals,” Hobbs added.

However, top Russian producer Rusal, which accounts for 6% of global supply, says many Asian and European consumers are still buying its material.

Last month, Rusal said it boosted sales in Asia and Europe remained a key market, accounting for more than 30% of revenue in the first half of 2023.

Five European industry associations asked the LME to ignore calls for a ban and Rusal criticised rival Hydro, saying it was aiming to destabilise the market for its own benefit.

Aluminium stocks of Russian origin in LME-approved warehouses that are available to the market have risen this year to 81% of the total in August, from 41% in January.

As some consumers shun Russian metal, more material has been flowing to China. The share of Russian metal among total unwrought aluminium imports to China has surged to 46% in the first seven months of this year from 27% during all of 2022.

Industry players in Barcelona will also be looking for signals on the demand outlook as weak global growth and steady output in China weighs on prices.

The benchmark price of the lightweight metal used in transport, construction and packaging has fallen 8% so far this year, pressured by worries about sluggish growth in top consumer China and interest rate hikes elsewhere.

(Reporting by Eric Onstad; Editing by Veronica Brown and Alexander Smith)