Copper Macro Thread, page-215

There's so much info about how poorly it's gone, to the point it's actually done the opposite of it's intention and helped Russia fund their military.

Meanwhile in the west, it's jacked up inflation and the cost of living (though nowhere near as much as the endless money printing).

This recent round of sanctions is going to have a dramatic effect long term effects, but here in the west and more on how things are structured rather than price of the commodities as people think.

At the end of March, Russian metal accounted for 36% of the nickel in LME warehouses, 62% of the copper and 91% of the aluminum.

How much aluminum, copper and nickel does the US currently import ?
Very little, imports for 2021, 2022 and 2023 respectively were
Aluminum (HS code 7601): 215k, 190k, 17k MT
Copper (HS code 7408 + 7403): 10k, 0k, 0k MT
Nickel (HS code 7502): 5k, 10k , 0.6k MT
Therefore Goldman expects the impact on US physical premiums to be modest because US consumers have already diversified their supply chains away from Russian metal

So all good for America right? Yes...but not for the rest of the west. Also, this will strengthen the shanghai exchange and diminish the LME. They already took a credibility hit after the nickel squeeze incident a few years back.

The metals will still find their way into markets so this is not going to create an actual shortfall, but it will create market inefficiencies. Note that it's also not full sanctions and there are still numerous loopholes companies will use to get Russian supply if they want it.

OFAC prohibit:
a. Russian metal being imported into the US
b. OTC derivates settling against Russian metal
c. US persons’ from warranting Russian metal produced after 13th April 2024 on either the COMEX or LME.
There has not been any sanction around the consumption of Russian metal.

Long story short this is bullish for AW1, as a local western producer if AW1 can produce low cost concentrate as we're hoping, there will likely be increased demand as Russian metal redirects to Asia, becomes more annoying to buy or gets a bad ESG rap for companies looking to sign offtakes that will look good in the eyes of western consumers. It's less of a price orientated story and more of a small step towards bifurcation.