LME could impose Russian metal ban

After Thursday s record surge, the London Metal Exchange imposed a ban on Russian metal exports that would cause supply concerns, with the London Metal Exchange imposing a ban on Russian metal exports.

After Bloomberg reported that the bourse plans to launch a discussion paper on whether and under what circumstances it should block new supplies of Russian metal from being delivered to its network of warehouses, aluminum climbed for a third day after a record 8.5% gain.

The move by the LME to block Russian supplies could have significant consequences for the global metals markets, as the country is a major producer of vital materials, including nickel and copper.

The biggest impact would be on aluminum, as about half of Europe smelting capacity has already been curtailed due to record electricity costs in the wake of Russia's invasion of Ukraine. After the metal was caught in a sell-off in recent weeks due to global recession fears, a ban would likely lead to increased trading volatility.

An analyst with China Futures Co. wrote in a note about the possibility of a possible short squeeze on aluminum. Wang Xianwei, an analyst with China Futures Co., said that the potential ban has fueled concerns about a possible short squeeze on aluminum. He said that the LME will try to avoid a similar squeeze that occurred to nickel in March.

Goldman Sachs downplayed the likelihood of such a ban and said the pressure on metals prices would continue, given the current environment of physical demand weakness in Europe. Nicholas Snowdon, analysts including Nicholas Snowdon, said that the geopolitical situation doesn't incentivize delisting Russian metals from the exchange.

In September, China s factory activity struggled as the country's economic recovery was challenged by lockdowns in major cities and an ongoing property market downturn, according to the demand outlook of industrial metals including copper.

After four weeks of losses, aluminum gained 1.6% to $2,232 a ton on the LME as of 7: 55 a.m. local time. Other base metals were generally higher, with copper rising 0.2% and zinc gaining almost 2%.