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The LME will not ban Russian metal from being traded and delivered to exchange warehouses, the exchange stated after last Friday’s close. Likewise, they will not impose limits on how much Russian metal can be delivered or stored at exchange warehouses. According to the LME, many end-users have already contracted to buy Russian metal next year. Moreover, no Russian metals producers have been sanctioned, therefore the exchange believes it “should not take or impose any moral judgments on the broader market." However, the LME later stated that it will “remain responsive to any sanctions or tariffs imposed by governments and will communicate with the market should those arise.” The statements were from the exchange’s response to the discussion paper on Russian metals it launched in early October. The motivation for the discussion paper stems from Russia’s ongoing conflict with Ukraine. (Source: Reuters, LME) |
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LME aluminum has had a muted reaction to this news. Similarly, aluminum prices have largely trended sideways since early October. However, allowing large volumes of Russian aluminum onto the LME could push prices lower. Aluminum producers that are concerned about decreasing prices could consider selling swaps or buying put options. Such positions are standard for producer hedging; however, they can result in opportunity costs or cash costs if metal prices increase. Please contact AEGIS for specific strategies that fit your operations. (11/14/2022) |
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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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Price Indications |
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Today's Charts |
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AEGIS Insights |
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11/09/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 11/07/2022: AEGIS Primer on LME Aluminum Price History 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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11/11/2022: China shortens quarantines as it eases some of its COVID rules 11/11/2022: LME will not ban Russian metal from its system |
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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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