Wednesday, March 22

LME aluminum hovers near 13-year peak amid Russia-Ukraine standoff

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London aluminum prices held near their highest levels in more than 13 years, as investors took a cautious stance on Wednesday after a set of Western sanctions against Moscow raised fears of an interruption in Russian exports.

The United States, the European Union and Britain announced plans to target banks and elites while Germany halted a major gas pipeline project from Russia, which they say has amassed more than 150,000 troops near Ukraine’s borders. They threatened to go further if Moscow launched an all -out invasion of its neighbor.

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“While aluminum and nickel are particularly vulnerable to a more severe escalation and sanctions package, no European country is incentivized to pursue such a course of action, particularly given inflationary concerns, unless absolutely necessary,” TD Securities said in a note.

Russia produces around 6% of the world’s aluminum and 7% of its mined nickel. Sanctions on aluminum maker Rusal in 2018 drove the metal’s price up 35% in days.

Three-month aluminum on the London Metal Exchange was flat at $3,302.5 a tonne by 0622 GMT. On Tuesday, prices hit $3,380, just shy of 2008’s record of $3,380.15.

LME nickel eased 0.1% to $24,525 a tonne, having hit a peak since August 2011 in the previous session.

“Aluminum, nickel and copper prices and backwardation should ease over time as real demand is not that robust and as Russia-Ukriane tensions fade,” a Singapore-based trader said.

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* LME copper gained 0.3% to $9,944.5 a tonne, lead rose 0.1% to $2,344.5, zinc was 0.2% higher at $3,613 and tin climbed 0.3% to $44,500.

* The most-traded March copper contract on the Shanghai Futures Exchange rose 0.3% to 71,290 yuan ($11,264.73) a tonne.

* ShFE aluminum slipped 0.5% to 22,760 yuan a tonne, nickel fell 1.6% to 176,490 yuan, zinc climbed 1.1% to 25,090 yuan, lead edged 0.4% higher to 15,550 yuan and tin dipped 0.4% to 337,370 yuan.

* The premium for cash nickel over the three-month contract soared to $645 a tonne, its highest since 2007, while inventories in LME-registered warehouses have fallen to more than two-year low of 82,314 tonnes.

* The global zinc market deficit narrowed to 37,300 tonnes in December from a revised shortfall of 43,100 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed on Tuesday.

* The global lead market flipped to a deficit of 37,700 tonnes in December, data from ILZSG showed.

* Brazilian miner Vale SA said on Tuesday its Totten copper, nickel and precious metals mine resumed operations and is in production ramp-up phase.

* Japanese markets were closed on Wednesday for the Emperor’s birthday holiday.

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($1 = 6.3286 Chinese yuan) (Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)