(Bloomberg) — The metals world is beginning its annual ritual of hashing out contracts for the upcoming year with one key question in many traders’ minds: What’s going to happen to Russian supplies?
Most Read from Bloomberg
The country is a big producer of aluminum, nickel, copper and palladium, and supply deals signed before the war mean sales have largely kept flowing since the invasion of Ukraine. But September marks the start of what’s known as “mating season,” when new contracts are negotiated, and traders and executives say there’s a growing unwillingness in western manufacturing hubs to receive new Russian metal.
The self sanctioning could disrupt trade dynamics in global metals markets for years, creating schisms between regional markets as those still willing to buy attempt to scoop up Russian metal on the cheap. For aluminum in particular, Europe is usually a key market. Speaking privately, several traders also said they expect significant volumes of Russian aluminum to be dumped on the London Metal Exchange, potentially creating distortions in the global benchmark market.
Read: Metals World Agonizes Over War But Keeps Buying From Russia
Norsk Hydro ASA won’t agree to any new Russian metal, while Novelis Inc. has excluded Russian production from a key tender for new contracts to supply its European factories next year. Buyers overall are increasingly pushing back, although some in southern Europe may be more flexible if they can buy at a discount, according to traders involved in the market who asked not to be identified discussing private information.
“We categorically will not be buying from Russia for 2023,” said Paul Warton, executive vice president for Norsk Hydro’s extruded aluminum products business. “I don’t know where that material will flow to now — maybe into Asia, China, Turkey, and other areas that haven’t taken as tough a stance on Russian material.”
There are similar trends in other markets where Russia is the dominant supplier, such as nickel and palladium, but aluminum giant United Co Rusal International PJSC is particularly embedded in the European market and some specialized products vital for carmaking and aviation will be hard to substitute. Aluminum is also the market most vulnerable to growing stockpiles of unwanted Russian metal, because China has plentiful domestic production, making it harder to redirect sales eastward.
The shift from Russia also comes at a time when soaring energy costs are squeezing Europe’s domestic aluminum smelters, although Hydro’s Warton said the industry should be able to plug the gap with alternative supplies, such as imports from the Middle East.
Neither Rusal nor nickel and palladium giant MMC Norilsk Nickel PJSC have been sanctioned by the U.S. or Europe.
And while some large buyers are balking, Rusal is planning to keep large shipments flowing to Glencore Plc under a multiyear supply deal that it signed in 2020, according to people familiar with the matter.
For Nornickel, early discussions with customers suggest that European buyers will try to reduce purchases, according to a person familiar with the matter. It’s too early to estimate how big the effect will be, the person said. The company’s large share of global production means its metals are hard to replace, although the miner is prepared to shift some sales eastward.
Spokespeople for Rusal and Nornickel didn’t immediately respond to requests for comment. Glencore declined to comment.
The question of Russian metal also remains a key focus for the London Metal Exchange and its members, according to people familiar with the matter. The exchange doesn’t plan to take independent action against Russian suppliers outside the scope of government sanctions, but is keeping the situation under review, a spokesperson said.
If Rusal’s sales do drop sharply in Europe, the producer may offload excess stocks onto the exchange. Such a move could put further pressure on prices and — if the bourse becomes a dumping ground for metal that industrial consumers don’t want to touch — could force it to reassess its stance.
The LME is looking closely at the issue and it is a regular subject of discussion at meetings of the board and metal committees, one of the people said.
“If the demand isn’t there to absorb production then you will be likely to see more deliveries into the LME system,” Nicholas Snowdon, an analyst at Goldman Sachs Group Inc., said at a Fastmarkets aluminum conference in Barcelona. In the context of softer market conditions, self-sanctioning also “increases the likelihood of further deliveries,” he said.
As contractual discussions get underway, the metals industry also needs to weigh the outlook for weaker demand amid global economic gloom, against tightening supply in Europe, where high energy prices have forced smelters to cut back and even halt production.
A key part of the negotiations for deals will be the delivery surcharges that contractual customers agree to pay over futures prices for metal delivered to local ports, and traders are bracing for a big drop. European suppliers say they’re optimistic that the mounting aversion to Russian metal will give them an advantage premiums, while Rusal may need to offer discounts on its delivery premiums to entice buyers.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
LONDON (Reuters) -The London Metal Exchange faces a struggle to regain its dominant position in global nickel trading as volumes slide and participants flee an increasingly volatile market in the wake of trade mayhem earlier this year. Nickel volumes on the world’s oldest and largest venue for trading metals collapsed after the LME suspended its contract for a week and cancelled all trades on March 8, when prices doubled in a few hours to a record above $100,000 a tonne. LME data shows many participants have abandoned the nickel market, a trend several traders say looks set to continue leading to even lower volumes and more volatility as more people opt to negotiate prices directly.
(Bloomberg) — Russia’s financial sector suffered hundreds of billions of dollars in “direct losses” from the sweeping sanctions imposed by the US and its allies over President Vladimir Putin’s invasion of Ukraine, according to an internal Finance Ministry document.Most Read from BloombergTerra Co-Founder Do Kwon Faces Arrest Warrant in South KoreaUS Inflation Tops Forecasts, Cementing Odds of Big Fed HikeStocks Rise as Dip Buyers Win Tug of War Over Fed: Markets WrapXi Returns to World Stage Wi
(Bloomberg) — Alcoa Corp. is getting squeezed by higher energy costs and lower aluminum prices, which the company warned investors late Wednesday will result in lower earnings for the third quarter.Most Read from BloombergTerra Co-Founder Do Kwon Faces Arrest Warrant in South KoreaNY Judge Who Doesn’t Tolerate ‘Nonsense’ May Be Named Special Master in Trump CaseRay Dalio Does the Math: Rates at 4.5% Would Sink Stocks by 20%Stocks Rise as Dip Buyers Win Tug of War Over Fed: Markets WrapXi Unlike
Truss may also meet President Emmanuel Macron of France, as well as other key UK allies such as Australian Prime Minister Anthony Albanese and Canada’s Justin Trudeau, the report said. Queen Elizabeth’s funeral will take place in London on Sept. 19, and a host of world leaders, royalty and other dignitaries have already said they will attend.
Investors and consumers alike have been vexed by inflation this year, and many had hoped that the latest government reading would show inflationary pressures beginning to ease. When the report dropped Tuesday morning, however, the data was worse than expected, causing a broad-based market sell off. With that as a backdrop, shares of Alibaba (NYSE: BABA) slipped as much as 5.8%, while MercadoLibre (NASDAQ: MELI) and Sea Limited (NYSE: SE) each tumbled as much as 6.7%.
SHANGHAI (Reuters) -Five of China’s largest banks cut personal deposit rates from Thursday, according to information available on the lenders’ mobile apps, a move that could ease the pressure on their margins after recent lending rate cuts to revive the economy. The banks, including Industrial and Commercial Bank of China Ltd (ICBC), the world’s largest bank by asset, cut the interest rate for three-year term deposits by 15 basis points, the information showed. The interest rates for one-year and five-year deposits were lowered by 10 basis points.
NEW YORK (Reuters) -U.S. Treasury yields surged and a recession warning – the yield curve inversion – widened on Tuesday after monthly U.S consumer prices unexpectedly rose in August, signaling to the market that the Federal Reserve will crack down further on inflation. The yield on two-year Treasury notes, which typically reflects interest rate expectations, spiked to an almost 15-year high of 3.794%. The jump significantly widened the yield curve gap with the benchmark 10-year Treasury note.
There are plenty of ways to minimize your tax liability and that’s especially true when you have worked hard to sock away retirement money. Tax advisors are constantly searching for new ways to avoid paying taxes on IRA withdrawals. There … Continue reading → The post How Can I Avoid Paying Taxes on IRA Withdrawals? appeared first on SmartAsset Blog.
In a world where the stock market is unpredictable and interest rates are rising, many investors are looking for someplace to put their money that is as close to risk-free as possible – even if it means forgoing the chance … Continue reading → The post How to Buy More than $10,000 in I Bonds Through This Loophole appeared first on SmartAsset Blog.
The price of gasoline has dropped sharply in recent weeks, bringing a welcome relief to anyone with a car, but the fact remains that gas is still up more than $1.50 per gallon, on average, since the beginning of 2021. It’s been a major driver of inflation. And according to the latest numbers, for August, inflation remains high, at 8.3% annually. Much of that number is driven by increases in food and housing costs – but energy prices are also contributing, and this could, longer-term, be a boon f
American City Business Journals
To understand why Meta Platforms Inc. has been struggling of late and likely won’t rebound anytime soon, one doesn’t have to look much beyond founder and CEO Mark Zuckerberg, according to one leadership expert. Bad bosses can be placed into five different categories, Bill George, a senior fellow at Harvard Business School, told CNBC. Zuckerberg, who has headed Facebook’s parent company since he founded it while a student at Harvard, fits into three of those, George said.
German Defence Minister Christine Lambrecht said on Wednesday it is too early to tell whether Ukraine’s significant territorial advances in recent days mark a turning point in the war prompted by Russia’s invasion of its neighbour. “This is hard to assess because we don’t know how the Russians will react now (to Ukraine’s counter-offensive),” Lambrecht told Reuters in an interview at the defence ministry in Berlin. “But it is definitely a remarkable success that will contribute to Russia’s destabilisation,” she added, speaking of a weakening of the Russian military.