The data showed that the EU and the U.S. increased purchases of key industrial metals from Russia despite logistical issues raised by the war in Ukraine and tough talk about Moscow’s lack of foreign exchange earnings.
The metal shipments underscore the West’s difficulty in pressuring the Russian economy, which is performing better than expected and the ruble’s exchange rate has soared as strong oil revenues offset the impact of sanctions.
Official trade data compiled by Reuters from the United Nations Comtrade database showed imports of aluminum and nickel, Russia’s main base metal products, by the European Union and the United States rose 70 percent between March and June.
Data show that the total value of EU and U.S. imports of the two metals from March to June was $1.98 billion.
The West has imposed wave after wave of sanctions on various Russian products, people and institutions, but to a large extent not on the industrial metals sector.
Exclusive EU, U.S. Increase Russian Aluminum, Nickel Imports Since Ukraine War Reuters
In response to a Reuters inquiry, a U.S. State Department spokesman said, “While we have not pre-considered our sanctions actions, nothing could make Putin’s unjustified war against Ukraine more costly.”
The European Commission was not available for comment following the request.
Analysts say the U.S. and Europe have learned their lesson after the sanctions imposed by former U.S. President Donald Trump on Russia’s aluminum industry in 2018 wreaked havoc on the construction, auto and power sectors.
Those sanctions were lifted the following year.
Shortly after Russia began its invasion of Ukraine on Feb. 24, prices of both metals soared to record highs on fears that sanctions or logistical difficulties would hinder shipments.
But those fears were unfounded, as data showed Russia’s exports from March through June were relatively strong.
“The market mechanism is working,” said Julius Baer analyst Carsten Menke, referring to metal shipments from Russia.
“What we know from commodity traders is that it’s mostly a price issue. Rather than some politician not wanting you to buy, there is a trade here.”
More on aluminum
Russia’s Rusal is the world’s largest aluminum producer outside of China, accounting for about 6 percent of world production.
In the four months following Russia’s invasion of Ukraine, the EU was Russia’s largest importer of unwrought aluminum, importing an average of 78,207 tons per month from March to June, up 13 percent from a year ago.
Rotterdam, Europe’s largest port, said in a report that total throughput grew 0.8 percent in the first half of 2022, but that “breakbulk” – cargo not suitable for containers – rose sharply by 17.7 percent due to increased metal imports. – increased sharply by 17.7 percent.
A port spokesman told Reuters that cargoes of aluminum and nickel were still arriving at the port because they were not under sanctions, but declined to provide any figures.
On Tuesday, a unit of Norway’s Norsk Hydro said it would exclude the Russian metal from a deal to buy aluminum in 2023.
U.S. imports of Russian aluminum averaged 23,049 tons a month from March to June, up 21 percent from a year earlier.
“It’s very important for the Americans to have access to as many different sources of aluminum as possible,” said Tom Price, head of commodity strategy at Liberum.
“They are very reluctant to import any metal from China because Chinese exports are shrinking, so aluminum from Rusal is very important, and that’s why they haven’t shut down that trade.”
Overall shipments were relatively stable.
Russian aluminum imports to last year’s top seven destinations averaged 221,693 tons per month from March to June, down 9 percent from a year ago but 4 percent higher than the monthly average for all of 2021.
U.S. Nickel Shipments Surge
In nickel, Russia accounts for about 10% of global production, and the country’s Nornickel accounts for about 15%-20% of global battery-grade nickel.
Nickel imports from Russia to the top three destinations in March-June were up 17 percent year-over-year.
The U.S. saw the largest increase in shipments, up 70 percent compared to last year, while shipments from the European Union rose 22 percent.
Analysts said the post-invasion price increase provided additional impetus for continued exports.
Benchmark nickel prices on the London Metal Exchange doubled on March 8 to a record high of more than $100,000 per ton, prompting the LME to suspend trading and cancel trades.
Post time: Sep-08-2022