September 29, 2022

Aluminum prices jumped by over 8% this morning on reports that the LME could ban Russian aluminum and other metals from being delivered against LME contracts, according to Reuters and Bloomberg. Any move by the LME to block Russian supplies could have significant ramifications, according to Bloomberg. One anonymous source cited by Reuters stated, "the discussions are about the possibility of banning new deliveries." This same source told Reuters that trying to ban Rusal-produced aluminum that is already in LME warehouses "would be madness." In a brief statement, LME stated they will “take the required action to ensure market stability in response to sanctions,” later adding it will continually review the situation as they prioritize an “orderly market.”

Aluminum prices have largely trended down since early August. However, banning Russian aluminum from the LME could push prices higher. Aluminum end-users that are concerned about increasing prices could consider buying swaps or call options, as either would establish a maximum aluminum price. Such positions are standard for consumer hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (9/29/2022)

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Price Indications

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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.