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Russia’s top aluminum producer, Rusal, has sold 76% of its primary aluminum production for 2023, with Glencore remaining a top buyer, according to anonymous sources cited by Reuters. Terms for the 2023 contract haven’t been disclosed; however, in April 2020, Rusal signed a long-term sale agreement with Glencore for approximately 1.6 million mt per year between 2021 and 2024. Only about 10% of Glencore’s customer base is shunning Rusal’s metal, according to the sources. Due to the Russia-Ukraine conflict, some market participants believed buyers would shun Rusal in 2023, especially if Rusal’s metal is banned from the LME. Earlier this month the LME launched a discussion paper outlining possible actions against Russian metals producers, including an outright ban on their metals. The deadline for responses was last Friday, October 28. |
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Sanctions against Rusal, if implemented, could be supportive of global aluminum prices. This is mainly because the US and Europe are large buyers of Russian aluminum, and importers will need to seek out new suppliers if Russian metals are blocked from the market. Aluminum end-users that are concerned about increasing prices could consider buying swaps or call options. 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. (10/31/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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10/26/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 10/05/2022: European Aluminum Smelters Might Have Negative Margins Through 2023 8/31/2022: Will Chilean Production Issues Drive Copper Prices Higher? |
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10/28/2022: Glencore cuts zinc output guidance after production drops 18% in nine months 10/27/2022: US Steel earnings, steel production drop 10/27/2022: Glencore to stick with Rusal's aluminium in 2023 -sources 10/26/2022: US steel imports lowest since Feb 2021 10/26/2022: Whirlpool cuts production by 35pc as demand falls 10/25/2022: US HRC: Prices flat, market sees lower offers 10/25/2022: Cliffs aims to increase quarterly steel production 10/25/2022: Norsk Hydro calls for EU, US sanctions on Russian aluminium 10/24/2022: China Sept aluminium output rises 9.3% y/y as power restrictions ease 10/24/2022: LME Week: Al market braces for the unknown 10/21/2022: Alcoa reduces 2022 alumina, bauxite outlook |
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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.
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