Russia metals sanctions on aluminium, copper, and nickel: Which...

Russia metals sanctions on aluminium, copper, and nickel: Which ASX miners stand to benefit?

Apr 16, 202414:51 GMT+10

AWC0BHP+1.46%S32+1.23%CTM+1.39%

KEY POINTS:

• Russia is a major global producer of aluminium, copper, and nickel
• The UK and US have banned deliveries of Russian aluminium, copper and nickel to the LME and CME warehouses
• What will be the short-term and long-term impact on markets of new sanctions on Russian copper, aluminium and nickel?
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On Sunday, the UK and US governments introduced further punitive trade restrictions on Russia in response to its invasion of Ukraine in 2022. London Metals Exchange (LME) and CME warehouses can no longer accept aluminium, copper, and nickel originating or located in Russia on or after 13 April 2024.

The ban is in addition to earlier measures taken by the UK in December, which prohibited trading in metals but are entirely new from the perspective of the US. Here is the full list of metals impacted by the ban:

• Copper and articles thereof

• Nickel and articles thereof

• Aluminium and articles thereof

• Lead and articles thereof

• Zinc and articles thereof

• Tin and articles thereof

• Tungsten (wolfram) and articles thereof, including waste and scrap

• Molybdenum and articles thereof, including waste and scrap

• Tantalum and articles thereof, including waste and scrap

• Magnesium and articles thereof, including waste and scrap

• Cobalt mattes and other intermediate products of cobalt metallurgy, cobalt and articles thereof, including waste and scrap

• Bismuth and articles thereof, including waste and scrap

• Zirconium and articles thereof, including waste and scrap

• Antimony and articles thereof, including waste and scrap

• Manganese and articles thereof, including waste and scrap

• Beryllium, chromium. hafnium, rhenium, thallium, cadmium, germanium, vanadium, gallium, indium and niobium (columbium) and articles of these metals, including waste and scrap

• Cermets and articles thereof, including waste and scrap

• Tools, implements, cutlery, spoons and forks of base metal; parts thereof of base metal

• Miscellaneous articles of base metal

The short and long-term impacts on metals markets and the global economy

Most analysts believe the new bans on flows of Russian metals into LME and CME warehouses will have minimal initial shock value to markets as they’re only incremental from the UK’s perspective, and imports of base metals into the US from Russia had effectively shrunk to zero already due to prevailing punitive tariffs.

The longer-run impact of the latest crackdown may be more significant, though, as it will likely make it more difficult for traders to transact in metals that can no longer be stored or cleared through the LME and CME. This will likely create inefficiencies within metals markets which could hamper supply chains in the short to medium term.

Contrasting this, the new and existing bans will increasingly force Russia to divert its metals exports to sanction-neutral countries, particularly China, therefore forcing it to accept greater discounts. China represents roughly half of global aluminium and copper consumption and around 60% of global nickel consumption. So any increase in the discounting of metals China purchases will likely trickle through to the rest of the pricing system, likely having a dampening effect on prices.

One beneficial outcome not relating to metals markets but that is important for the global economy, relates to the fact that China is a major global producer of manufactured products. China is already experiencing a deflationary wholesale price environment (existing Russian sanctions are likely helping), and any extra discounts they can achieve on their input costs help them keep down the costs of their exports to the rest of the world.

LME Tin

Market Index

LME Tin price chart

From a technical analysis standpoint, the chart of LME Tin shows a strong and well-established short-term uptrend and a newly established long-term uptrend.

This is the LME base metal that shows the most promise for continued trend extension along with LME Copper. Given it has closed above the historical point of supply of 32050, it likely has more upside than copper to its next key historical point of supply at 37200.

32050 is now a point of demand, and below this, the next key historical point of demand is 29450.

ASX tin stocks to watch: MetalsX MLX

Tin production (tonnes) by countryCountry (or area)Production World310,000
China *85,000
Indonesia *80,000
Myanmar *54,000
Peru *18,500
Bolivia17,000
Brazil *17,000
Congo *10,000
Nigeria *7,500
Australia7,000
Vietnam *4,500
Malaysia *4,000
Rwanda *3,000
Russia *1,400
Laos *1,000
Others1,400