"But as you have less and less people willing to take Russian metal, as you start to see banks that are not willing to finance that metal and traders that have said they're not going to be dealing with Russian metal, it increases the risk of a nonfunctioning market," Harvey said.Īlcoa posted an attributable net loss of $102 million in the second quarter, swinging from a year-ago profit of $549 million. But the increasing percentage of Russian-made aluminum means it would require more capital to buy non-Russian metal. Harvey said buyers currently have enough capital to purchase enough tons to access non-Russian aluminum and leave Russian metal in warehouses. "Because those stocks are now predominantly Russian-origin metal, which is unwanted by much of the world, it is difficult to have confidence that the LME exchange price matches the true physical price for non-Russian aluminum that customers largely require," Harvey said. Harvey said the buildup of Russian aluminum in LME warehouses would "cause this unwanted metal to inappropriately influence the global benchmark on pricing, damaging the integrity and relevance of the LME's aluminum contract." Inventories in LME warehouses are used as the basis for the published LME aluminum price, which is used as a price reference in global aluminum contracts.
Receive daily email alerts, subscriber notes & personalize your experience.ĭuring a July 19 earnings call, Harvey said Russian-origin aluminum now accounts for 80% of total LME aluminum stocks as of the end of June, an all-time high.
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