CommentaryMarket Analysis

As the Oct. 23 deadline approaches, the aluminum market is taking no risks on continued supply from Russia’s Rusal, Reuters reports.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

The industry traditionally gets together in Berlin this week to negotiate annual supply contracts for 2019 with billet makers, rolling mills and casting plants rubbing shoulders at a conference known, as Reuters notes, as the “mating season” … except one stag in the herd has been shut out.

European customers will avoid 2019 supply deals with Rusal. “We can’t agree a deal with Rusal on the basis that sanctions will be lifted by Oct. 23,” a Rusal customer in Europe is quoted by Reuters as saying, adding “Anyone that has a relationship with Rusal will be preparing for the sanctions to remain in place for now.”

The aluminum market has so far been relaxed about the fallout from Rusal being placed under sanctions at the beginning of April once a stay of execution was granted later in the month. The expectation has been the sanctions would be lifted in October.

But over the last week or two, doubts are being raised and the fear factor is dissuading buyers from taking the risk.

This is no small issue for the industry, although the market has since had time to adjust to the idea. The reality is the aluminum supply market is in deficit and Rusal still contributes some 6% of global supplies.

Even if sanctions are somehow avoided next month, Rusal will be without its normal quota of annual supply contracts, forcing it to sell on the spot market. Reuters suggests this will contribute to volatility next year, even if the market can access all the metal it needs.

But if Oleg Deripaska fails to sufficiently distance himself from Rusal and En+, such that sanctions are applied as currently expected, expect physical delivery premiums in Europe to rise again and for considerable disruption to the supply market next year. You cannot take nearly 4 million tons a year of metal out of an already tight market and not expect there to be casualties.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

The industry’s calm over the summer is going to be tested in coming weeks as the deadline approaches. Even if sanctions are avoided, the result of Rusal being left with only a spot market next year will in itself contribute to volatility buyers could do without.

The Rare Earths Monthly Metals Index (MMI) dropped one point this month, falling for a reading of 17.

Metal Buying Outlook: Request Your Two-Month Free Trial

China Raises Quota for Rare Earth Smelting, Separation

On Aug. 27, China’s Ministry for Industry and Information Technology announced it would increase the quota on rare earth smelting and separation.

The quota increased 15% to 115,000 tons, according to Reuters.

Caught in the Crossfire

The South China Morning Post reported on a Chinese company that could get caught up in the escalating trade war between the U.S. and China.

Shenghe Resources Holding, as the Post notes, is one firm in a consortium that has invested in the Mountain Pass mine in the U.S. (which was the only operating rare earths mine in the U.S. before owner Molycorp filed for bankruptcy in 2015).

If the back and forth results in China imposing a tariff on U.S. rare earths, as the article notes, that could throw a wrench into the consortium’s plans to export materials from the mine to China and, moreover, impact the mine’s viability.

Rare Earth Recycling

The US Federal Laboratories Consortium recently recognized a team of researchers for their work on a rare-earth magnet recycling process.

According to Recycling International, researchers from the Critical Minerals Institute and Ames Laboratory were honored with the Notable Technology Development Award for their work on a rare-earth magnet recycling process.

”A unique strength of this technology is that operational hazards and negative environmental impacts associated with acid-based dissolution process are eliminated without sacrificing purity, efficiency and potential economic impact” said Ikenna Nlebedim, the lead investigator for the research, in an Ames Laboratory release on the news.

Given China’s overwhelming dominance of the global rare earths market, the U.S. has continued to explore options to move away from dependence on foreign sources of the materials. According to the release, the process entails magnets being “dissolved in water-based solutions, recovering more than 99 percent purity rare earth elements.”

According to the Ames Laboratory announcement, collaboration is ongoing with a commercial partner, Infinium Metals, to produce metal ingots at a larger scale.

Per the release, patents are being filed for the researchers’ recycling process.

Actual Metal Prices and Trends

Yttrium fell to $32.88/kilogram, down 0.5%. Terbium oxide fell 0.5%, down to $427.39/kilogram.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Neodymium oxide dropped 1.5% to $46,245.80/mt. Europium oxide fell 6.8% to $43.10/kilogram. Dysprosium oxide fell 0.9% to $167.30/kilogram.

The September Aluminum Monthly Metals Index (MMI) traded sideways this month. The Aluminum MMI index stands at 95 points.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

LME aluminum prices increased in August. However, so far in September, prices have fallen. Aluminum prices are in a sideways trend within the $1970-$2170/mt band.

Source: MetalMiner analysis of FastMarkets

Buying organizations may want to remember that the $1,970/mt level has served as a strong support level (or floor) since August 2017.

During 2017 and 2018, aluminum prices fell two times  toward that support level and rebounded from it. Aluminum prices decreased in December and April.

Therefore, buying organizations may want to follow closely how aluminum prices react to that level.

Global Aluminum

Mexico launched an anti-dumping probe against Chinese aluminum foil makers after reaching a new NAFTA deal with the U.S.  Mexico and the U.S. reached a new NAFTA agreement on Aug. 27. The U.S. and Mexico agreed to increase regional automotive content to 75% from the current 62.5% in NAFTA. The deal will be reviewed after six years. As stated by the USTR, duty-free access for agricultural products remains in place.

Meanwhile, Japanese aluminum premium offers have fallen by around 13-15% from last quarter. Current pricing indicates Japanese aluminum premiums of between $112-$115/mt. Premiums represent the regional logistical costs of moving metal from the producer to the regional exchange. (it is a cost borne by the consumer). Japan is Asia’s biggest aluminum importer.

SHFE Aluminum

Chinese SHFE aluminum prices increased in August, following the LME aluminum trend.

So far in September, prices have retraced slightly. As with LME prices, the SHFE long-term trend has become a mostly sideways trend.

Source: MetalMiner analysis of FastMarkets

U.S. Domestic Aluminum

As a result of the ongoing uncertainty in the aluminum market, U.S. Midwest aluminum premiums have skyrocketed this year.

However, the U.S. Midwest premium has fallen for the second consecutive month. The premium currently stands at $0.19/pound.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

Despite the recent downtrend, the LME aluminum price trend suggests a continuation of the bull market that started last year.

Tariffs, sanctions and supply concerns will act as supports to aluminum prices, both for LME aluminum and the U.S. Midwest premium. Adapting the right buying strategy becomes crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

Click here for more information from our Monthly Metal Buying Outlook on how to mitigate price risk year-round.

Want to see an Aluminum Price forecast? Take a free trial!

Actual Aluminum Prices and Trends

LME aluminum prices increased this past month, with a closing price in August of $2,118/mt.

Meanwhile, Korean Commercial 1050 sheet fell by 3.6%, following last month’s downtrend.

Chinese aluminum primary cash prices increased by 1.12%, while Chinese aluminum bar increased by 5.03%. Chinese aluminum billet prices also decreased 5.26% this month, falling to $2,313/mt.

The Indian primary cash price fell by 0.48% to $2.06/kilogram.

The Renewables Monthly Metals Index (MMI) dropped one point this month, falling for a September reading of 104. 

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Making the Desert … Green?

Forms of renewable energy, like wind and solar, have gained momentum in recent years, both in practice and in popular support.

One place that could benefit from a renewable revolution? The Sahara Desert.

According to a BBC report, researchers claim installation of wind turbines and solar panels in the desert there could have the effect of doubling the amount of rainfall it receives, ultimately yielding more plants and life of all kinds.

The researchers published their study in the journal Science.

“In this study, we used a climate model with dynamic vegetation to show that large-scale installations of wind and solar farms covering the Sahara lead to a local temperature increase and more than a twofold precipitation increase, especially in the Sahel, through increased surface friction and reduced albedo,” the study’s abstract states. “The resulting increase in vegetation further enhances precipitation, creating a positive albedo–precipitation–vegetation feedback that contributes ~80% of the precipitation increase for wind farms. This local enhancement is scale dependent and is particular to the Sahara, with small impacts in other deserts.”

E.U. Lifts Ban on Solar Panels from China

The E.U. has opted to lift a restriction on imports of solar panels from China, the South China Morning Post reported.

The 28-member bloc initially imposed duties on the solar panels in 2013, but the European Commission announced it would not extend them. The duties expired at midnight on Sept. 3.

“After considering the needs of both producers and those using or importing solar panels the Commission decided it was in the best interests of the EU as a whole to let the measures lapse,” the European Commission release states. “This decision also takes into account the EU’s new renewable energy targets.”

Actual Metal Prices and Trends

Japanese steel plate rose 7.8% month over month to $54.01/mt. Korean steel plate fell 0.8% to $108.36/mt. Chinese steel plate rose 1.4% to $121.96/mt.

U.S. steel plate jumped 1.1% to $309.07/st.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Chinese cobalt dropped 0.5% to $2,915.02/mt.

To be fair, not all shale gas drilling is slowing, but in the Permian Basin, which has seen the most incandescent growth in recent years, according to the Financial Times, growth is slowing markedly, according to Schlumberger, Halliburton and the U.K.’s Weir Group – all majors suppliers to, or active players in, the fracking industry.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Source: Financial Times

The article cites logistical challenges, including labor costs and a lack of adequate pipeline capacity constraining growth. The article states the following factors have undermined the economics of oil production in the region:

  • rising costs for labor and equipment
  • difficulties in disposing of the unwanted water and natural gas produced alongside the oil
  • and, above all, a shortage of pipeline capacity for taking crude from the wilds of west Texas to refineries and export terminals along the Gulf of Mexico coast.

The Financial Times quotes Bill Thomas, chief executive of EOG Resources, who said: “When you’re focused on one basin, one play, it gets very difficult to continue high rates of growth.”

Source: Financial Times

From a low two years ago, the tight oil industry’s rebound has been impressive. Much of it is coming from the Permian Basin, with national production up by 1.5 million barrels a day in the 12 months to July.

But questions are being asked as to whether or not the Permian may be reaching a plateau. New wells drilled alongside older wells are relatively less productive than the original when assessed on the basis of their length and the weight of sand used in the fracking process — so-called “parent” and “child” wells, as the Financial Times calls them.

That would suggest the long-term potential for the region to continue impressive growth at ever-lower cost is called into question.

Whether that proves to be the case remains to be seen. Of course, the Permian is not the only tight oil resource in the country. While others haven’t seen the level of investment the Permian has enjoyed in the last two years, subject to oil prices, the other regions still have huge potential.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

What it probably does say is the stellar growth of recent years is unlikely to continue and may be slower from the middle of this year onwards. With the dramatic rise in steel prices following the U.S.’s imposition of a 25% import tariff on steel products, it was to be expected drillers would find both exploratory work and infrastructure investment slowing. However, the Financial Times suggests the slowdown has caught many in the industry by surprise and suppliers’ share prices have taken a hit as a result.

The Construction Monthly Metals Index (MMI) picked up two points this month, rising 2.2% for a September reading of 92.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

U.S. Construction Spending

U.S. construction spending in July — the most recently available month for Census Bureau data — hit $1,315.4 billion, which marked a 0.1% increase from the June 2018 revised total and a 5.8% increase from the July 2017 total.

Through the first seven months of the year, spending hit $740.5 billion, up 5.2% from the same period in 2017.

Private construction spending was at a seasonally adjusted annual rate of $1,010.9 billion, down 0.1% from the revised June estimate of $1,011.9 billion. Within private construction, residential construction was at a seasonally adjusted annual rate of $560.1 billion in July, up 0.6% from the revised June estimate of $556.7 billion. Nonresidential construction was at a seasonally adjusted annual rate of $450.9 billion in July, down 1.0% from the revised June estimate of $455.3 billion.

Meanwhile, public construction was at an estimated seasonally adjusted annual rate of $304.5 billion, 0.7% above the revised June estimate of $302.3 billion. Within public construction, educational construction was at a seasonally adjusted annual rate of $71.6 billion, up 2.1% from the revised June estimate of $70.1 billion. Highway construction was at a seasonally adjusted annual rate of $94.2 billion, up 0.4% from the revised June estimate of $93.8 billion.

Architecture Billings Rise at Slower Rate

According to the Architecture Billings Index (ABI) — put out by the American Institute of Architects — architecture billings grew last month, but at a slower pace.

The ABI for August hit 50.7 (a reading of 50 marks no growth), meaning growth was relatively minimal.

“However, this is not yet cause for concern because indicators of new work in the pipeline—measured by inquiries into new work and the value of new signed design contracts at firms—both remained strong in July,” the ABI report for the month states.

Billings decreased in every region but the South, according to the report. The South region led the way with an ABI of 55.2, followed by the West (49.6), Midwest (49.3) and Northeast (48.0).

This month’s survey asked architecture industry professionals regarding the impact of tariffs on their businesses on the heels of recent U.S. tariffs and the resulting retaliatory tariffs.

Per the report, 37% of firms indicated that they have seen specific consequences on projects as a result of the tariffs, an increase from 24 percent that reported the same in April,” the report states. “However, 49 percent of firms reported that they have still not seen any impact, while the remaining 14 percent of firms indicated that they were not aware of or not sure of any impact.”

Construction Jobs Added

According to a Bureau of Labor Statistics (BLS) report released today, U.S. unemployment for August was unchanged from the previous month, holding at 3.9%.

A number of sectors added jobs in August, according to the report, including construction.

The construction sector added 23,000 jobs in August after adding 18,000 in July and 8,000 in June. Jobs in the sector have increased by 297,000 over the year, according to the report.

Actual Metal Prices and Trends

Chinese rebar steel hit $661.91/mt for the month, posting a month-over-month increase of 6.1%. Chinese H-beam steel rose 1.2% to $613.69/mt.

U.S. shredded scrap steel fell 4.6% to $354/st.

European commercial 1050 aluminum sheet rose 1.6% to $2,913.29/mt.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Chinese aluminum bar jumped 5.0% to $2,405.08/mt. China 62% iron ore PB fines fell 0.5% to $76.71/dmt.

Zerophoto/Adobe Stock

Argentina is not exactly Venezuela, but you could be forgiven for shaking your head at the sheer ineptitude of Argentinian politicians who have presided over yet another economic crisis and have been forced to go to the IMF yet again for a $50 billion bailout.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

As Reuters observes, Argentina is struggling to break free from cyclical financial crises that have hit the country every decade over the past 60 years.

The most recent, in 2002, threw millions of middle-class Argentines into poverty and shook investor confidence in the commodities-reliant economy.

Not that the current administration caused the current morass — the fault for that lies with former President Cristina Fernández de Kirchner.

According to the BBC, her government, which was in power from 2007 until 2015, raised public spending, nationalized companies and heavily subsidized many items of daily life, ranging from utilities to football transmissions on television.

Worse, it controlled the exchange rate, which created all sorts of practical problems, such as giving rise to a black market for dollars and heavily distorting prices. The more conservative administration of President Mauricio Macri’s came into power promising fiscal responsibility and to stem the collapse of the newly freed up currency, but has consistently failed to lower inflation, which is the highest amongst G20 nations.

Since coming to power in 2015, Macri’s administration has failed to enact the economic reforms it promised the IMF, most of them aimed at curbing public spending and borrowing. The resulting spiral of inflation and draconian public spending cuts this year means wages are not keeping pace with prices, making most people poorer.

Source: Bloomberg via BBC

The country is facing inflation of over 31% by mid-2018, record unemployment and rapidly growing poverty marked by queues at soup kitchens, as the poor are unable to even feed themselves, which is leading to unrest.

Inflation is expected to end the year at over 40% despite stringent fiscal constraints the government is imposing. The government is following orthodox fiscal policies, partly under pressure from the IMF. Policies are in place to cut its ministries by more than 50% and decrease public spending by 4%. The goal is to advance the fiscal deficit reduction to zero next year, ahead of the earlier target of 2020. Even so, the peso has collapsed as investors have fled, devaluing by 52% just this year. In the last week alone, the currency lost 16% of its value.

So desperate is the situation that President Macri’s government has imposed a tariff on all exports — yes, you read that right, exports, including steel products.

Admitting it was a bad tariff and a desperate measure that ran counter to the normal intent to generate foreign currency through exports, Macri explained it was to avoid semi-finished products flooding out the country with the collapse of the peso. The government is fearful if it goes unchecked, the market will be devoid of raw materials and domestic manufacturing will collapse, adding to already rising unemployment and further dissuading investment.

According to Bloomberg, the tariff varies between primary products and finished products. For primary products, for every $1 exported, a duty of Argentinian Pesos 4 is charged (or about 10% at current exchange rates), while for finished products, for every $1 exported a duty of Pesos 3 is charged.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

It is hard to see a quick turnaround for Argentina; years of austerity and a harsh recession are likely on the table, with ongoing support from the IMF.

Following past real estate deals with the Macri family, President Trump is giving his verbal support to the Argentine president’s efforts, support that may prove vital if the current $50 billion does not prove sufficient to turn the economy around.

The Automotive Monthly Metals Index (MMI) dropped three points this month, falling for our reading of 96.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

U.S. Auto Sales

August proved to be an uneven month for auto sales in the U.S.

General Motors no longer publicly reports sales on a monthly basis, instead reporting quarterly. However, according to a Bloomberg report, GM’s August sales dropped 13% year over year.

Meanwhile, Ford saw its sales jump 4.1% in August compared with August 2017. Truck sales were up 5.7% and SUV sales rose 20.1%.

Ford Sales Analyst Erich Merkle noted the company’s gains in SUVs were led by the Ford Expedition, which was up 94.6%, and the Explorer (up 19.2%).

Fiat Chrysler reported a year-over-year sales increase of 10% in August, selling 193,718 vehicles last month.

Toyota, meanwhile, saw its August sales fall 2%.

Honda saw its car sales drop 15.3% year over year.

Chinese Sales Picture

Meanwhile, auto sales in China soared through the first six months of the year (up 5.6%), according to Forbes, but that has slowed since.

As has been referenced with respect to individual metals, rising trade tensions have had a generally depressive effect on multiple levels of the Chinese economy. The U.S. and China have already traded $50 billion in tariffs apiece, and the U.S. is currently reviewing additional potential tariffs on Chinese goods valued at $200 billion.


Speaking of trade tensions, the U.S. and Mexico recently agreed in principle to revise certain provisions of the North American Free Trade Agreement (NAFTA), the 24-year-old trilateral trade pact.

One ongoing point of dispute was regional auto content; that is, the percentage of an automobile that must be made using North American materials in order for that vehicle to be sold in the North American market without tariffs.

According to the agreement in principle, the threshold for regional auto content would increase from 62.5% to 75%.

Last week, Canada picked up negotiations with the U.S., which have spilled into this week.

In a phone conversation with Mexican President Enrique Pena Nieto, Trump zeroed in on Canada’s dairy industry and suggested the U.S. could impose tariffs on automobiles from Canada.

“You know, they have tariffs of almost 300 percent on some of our dairy products, and we can’t have that. We’re not going to stand for that,” Trump said.

“I think with Canada, frankly, the easiest thing we can do is to tariff their cars coming in. It’s a tremendous amount of money and it’s a very simple negotiation. It could end in one day and we take in a lot of money the following day.”

Actual Metal Prices and Trends

U.S. HDG steel fell 1.7% to $1,084/st. U.S. platinum bars fell 7.1% to $777/ounce, while palladium bars rose 5.5% to $979/ounce. U.S. shredded scrap steel fell 4.6% to $354/st.

LME three-month copper fell 6.2% to $5,849/mt.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Chinese primary lead rose 3.0% to $2,805.43/mt.

Have you set your 2019 metals budget?

Make sure your purchasing strategy is sound with MetalMiner’s free 2019 Annual Metals Outlook!

Arriving just in time for budgeting season, this report contains the unique insight, analysis and tools you need as a metal buyer or manufacturer to know when and how to make the buying decision — including expected average prices, support and resistance levels.

This free, downloadable PDF is one of MetalMiner’s most valuable pieces of content and includes coverage of commodities markets, industrial metals markets and key price drivers for aluminum, copper, nickel, lead, zinc, tin and steel (HRC, CRC, HDG, Plate).

By understanding these price drivers, you can pinpoint exact price levels and make the appropriate changes to your sourcing strategy for that particular metal. You will be also be able to react when the market gives clear signs that a new trend is developing, and stay hedged as long as that trend lasts.

The Annual Outlook Report continues to examine three variables which have underpinned metal markets in recent years:

  • Demand from China (and China’s overall economic outlook)
  • The strength of the U.S. Dollar
  • Oil prices and trends

While the 2019 Annual Metals Outlook report is free of charge, we do recommend you pair it with a subscription to our Monthly Metal Buying Outlook report in order to get the most valuable, up-to-date information and analysis of market conditions.

Download your report today!

alexkich/Adobe Stock

Following Russia’s military intervention in Ukraine in February 2014 — the Ukrainian crisis, as it became known as — a number of countries imposed sanctions on Russia led by the United States and Europe, but supported by many others like Canada, Australia and Japan.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

The impact on Russia’s economy was significant, but by early 2016 many countries, even within the previously united E.U., were calling for sanctions to be lifted (or at least revised).

By that stage, the Russian economy had recovered from the initial shock and, despite the restrictions, was doing rather well.

But this time last year, it all began to go downhill (again, this despite a very pro-Putin president being in the White House).

Initiated by President Barack Obama, Congress passed the Countering America’s Adversaries Through Sanctions Act, which imposed new sanctions on Russia for interference in the 2016 elections and its involvement in Ukraine and Syria.

Then, in March of this year, President Donald Trump imposed financial sanctions under the Act on the 13 Russian government hackers and front organizations that had been indicted by Mueller’s investigation into Russian interference in the 2016 U.S. elections.

This was followed in April by further economic sanctions on seven Russian oligarchs and 12 companies under their control. Among these was Oleg Deripaska, a move that sent such severe shock waves through the aluminum market that the administration hastily backpedaled and gave a stay of imposition until October “to allow the market to adjust.”

Many expected a permanent exception to be made for Rusal or for some fudge of ownership to be manufactured such that Deripaska was no longer deemed to be the controlling entity in holding company En+ or Rusal.

But as the date looms ever closer, questions are being raised about whether this will be how it plays out in practice.

More, rather than fewer, sanctions keep getting added to the list. A recent Economist article reports that in August alone, the U.S. has: slapped penalties on Russian shipping firms accused of trading oil with North Korea; imposed restrictions on the arms trade in connection with the poisoning of ex-Russian spy Sergei Skripal in Salisbury; and began congressional hearings on the two new pieces of legislation designed to punish Russia for its interference in elections.

The Economist report goes on to say the greatest threat to Russia’s economy comes from two proposed bills: the Defending Elections from Threats by Establishing Redlines Act of 2018 (DETER) and the Defending American Security from Kremlin Aggression Act (DASKA).

Sen. Lindsey Graham, one of DASKA’s six bipartisan co-sponsors, is quoted as saying it is the “sanctions bill from Hell.” When details of its contents made their way into the Russian press in early August, the rouble slid to two-year lows and the share prices of Russian state banks began falling, according to the Economist reported.

Source: Thomson Reuters

Russia has been taking active steps to mitigate the effects, funneling rising oil revenues into its National Welfare Fund and building up reserves.

However, despite a weaker rouble helping exporters, the economy is suffering.

The uncertainty around sanctions, their impact and the possibility of further measures is having a dire impact on inward investment. Compared with a year earlier, foreign direct investment fell by more than 50% in the first half of 2018, The Economist reported.

Coming as they do on top of the 10% U.S. import tariff on foreign-sourced aluminum, we will see considerable volatility and disruption to the aluminum markets this autumn if sanctions are applied to Deripaska, not to mention other oligarchs on the sanctions list. Shipments out of Russia for any metals – steel, aluminum, and other base and specialty metals – are already being severely delayed as banks scrabble to run compliance checks on the shareholdings and involvement of already sanctioned parties in those producers.

Delays of a month in paying bills normally processed in an hour are now common, which is disrupting supply chains and work flow. For the first time, the market is asking what will be the impact of a total ban on Russian metal supplies (never mind just Rusal’s aluminum).

Your supplier may not be Rusal, but your supplier’s supplier may be (or even his or her supplier’s supplier). The elevated conversion premiums we have seen this summer among European extruders is a reflection of this anxiety and will only get worse if further sanctions disruption ensues.

This uncertainty should be prompting all U.S. metal importers to explore the supply chain of their suppliers in order to understand the potential risks they face and, if necessary, take appropriate steps to safeguard supplies.

For those consumers thinking they only buy domestically and are therefore not affected — think again. You may be buying foreign made metal via a distributor and are potentially still exposed. Even if you are not, domestic prices will rise if there is any significant disruption to foreign supplies.

Want to see an Aluminum Price forecast? Take a free trial!

As we saw with the 25% tariff on steel and 10% on aluminum, tariffs cause domestic producers to move swiftly to capitalize on competitors’ cost increases by raising their own prices.