Alumina price leap will drive up cost for all aluminium producers
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Alumina price leap will drive up cost for all aluminium producers
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https://www.ft.com/content/4d16620a-4326-11e8-803a-295c97e6fd0b
The US sanctions against Russian aluminium producer Rusal have rattled global commodities markets, and sent metals tied to the country soaring. The sanctions have largely cut Rusal off from global markets — in effect removing about 3m tonnes of aluminium production, or 6 per cent of global supply. That has sent the price of aluminium up more than 24 per cent since the US Treasury made its announcement on April 6. But it has also had an even bigger knock-on effect on alumina, a key aluminium raw material, of which Rusal is a big supplier. Alumina prices have leapt as much as 80 per cent since the sanctions were announced. That will drive up the cost for all aluminium producers globally since making one tonne of the lightweight metal used in cans, cars and planes requires two tonnes of alumina. Rusal owns seven alumina refineries globally, including the Aughinish refinery in Ireland, Europe’s largest. While Russia produces just 2.5 per cent of global output, Rusal’s network of refineries produces about 6 per cent of the world’s supply. The sanctions have also had an impact on metals not directly connected to Rusal, including nickel and palladium. Nickel prices jumped as much as 10 per cent on Wednesday to hit their highest level since 2015 and palladium rose 3 per cent. While these markets have not been affected by sanctions, traders say they are concerned other Russian miners could be added to the list. Russia produces more than 10 per cent of the world’s nickel and 40 per cent of palladium. Read more: Investors handed a lesson in political risk as Rusal vanishes
https://www.ft.com/content/4d16620a-4326-11e8-803a-295c97e6fd0b
The US sanctions against Russian aluminium producer Rusal have rattled global commodities markets, and sent metals tied to the country soaring. The sanctions have largely cut Rusal off from global markets — in effect removing about 3m tonnes of aluminium production, or 6 per cent of global supply. That has sent the price of aluminium up more than 24 per cent since the US Treasury made its announcement on April 6. But it has also had an even bigger knock-on effect on alumina, a key aluminium raw material, of which Rusal is a big supplier. Alumina prices have leapt as much as 80 per cent since the sanctions were announced. That will drive up the cost for all aluminium producers globally since making one tonne of the lightweight metal used in cans, cars and planes requires two tonnes of alumina. Rusal owns seven alumina refineries globally, including the Aughinish refinery in Ireland, Europe’s largest. While Russia produces just 2.5 per cent of global output, Rusal’s network of refineries produces about 6 per cent of the world’s supply. The sanctions have also had an impact on metals not directly connected to Rusal, including nickel and palladium. Nickel prices jumped as much as 10 per cent on Wednesday to hit their highest level since 2015 and palladium rose 3 per cent. While these markets have not been affected by sanctions, traders say they are concerned other Russian miners could be added to the list. Russia produces more than 10 per cent of the world’s nickel and 40 per cent of palladium. Read more: Investors handed a lesson in political risk as Rusal vanishes
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