What’s new: All eyes were on prices of aluminum and nickel ahead of their opening in London on Monday, after supply concerns amid Russia’s invasion of Ukraine and subsequent Western sanctions whipsawed them last week.
The aluminum price on the London Metal Exchange (LME) jumped 3.1% to close at $3,395 per ton on Thursday, a historical high, before sliding 1.1% the next day. Prices of nickel also gained 1.3% to hit a near 11 year high of $24,716 on Thursday, and then dropped 1.4% on Friday.
Wang Yanqing, a futures analyst at CSC Financial Co. Ltd., explained that the LME price drop was probably caused by the fact that the initial U.S. and EU sanctions on Russia were not as severe as investors had predicted and Russia’s metal supply has not been affected so far.
If Russia’s nickel is hit by sanctions in the future, prices on the LME will surge while those on the Shanghai Futures Exchange (SHFE) will plunge due to a rise in nickel exports to China, said Wang Haoyang, an analyst at metal consulting institute CRU International Ltd.
Prices of the two metals’ most-traded contracts — which mature in April — on the SHFE slid as much as 2.8% on Friday.
Background: According to the U.S. Geological Survey, Russia was the second-largest producer of aluminum and the third-largest producer of nickel in the world in 2021.
After Moscow began its assault on Ukraine before dawn on Thursday, the U.S. and EU have imposed a string of financial sanctions, such as cutting off Russia's largest financial institution and its subsidiaries from the U.S. financial system. Some Russian banks have also been blocked from accessing the global payments system Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Read more Caixin’s coverage of the war in Ukraine
Contact reporter Manyun Zou (manyunzou@caixin.com)
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