Producers, analysts clash over market risk from Russian aluminum stockpiles (Article S&P)

09/29/2023

Aluminum producers in the US and Europe have suggested that stockpiles of Russian aluminum in London Metal Exchange warehouses are distorting global aluminum prices and that the disconnect is poised to get worse as the metal stock grows. However, analysts told S&P Global Commodity Insights that those concerns are unfounded and potentially self-serving.

Russia’s invasion of Ukraine in February 2022 made the country’s vast aluminum smelters anathema to several buyers in Canada, Europe and the US. Producers outside of Russia began to expect a price premium based on shrunken supply, but that has not yet materialized amid slumping global demand and a willingness of buyers in China, Latin America and Turkey to purchase Russian aluminum.

The aluminum stockpiled in warehouses owned by the London Metal Exchange (LME) is disproportionately Russian, but the overall stocks are low.