Andrey Rudakov | Bloomberg | Getty Images
A worker loads a liquid electrolyte into the electrolysis bath at the Krasnoyarsk aluminum smelter, operated by United Co. Rusal, in Krasnoyarsk, Russia.
Aluminum prices surged to their highest level in six years on Monday, extending a recent rally which follows the U.S. sanctioning of Russian aluminum giant Rusal.
The metal traded as high as $2,403 per ton on the London Metal Exchange, before holding more than 4 percent higher at 2,379.
On April 6, the U.S. slapped sanctions on several Russian oligarchs, officials, businesses as well as agencies, including Rusal. The sanctions freeze all of Rusal’s assets which are under U.S. jurisdiction.
Rusal — which saw its stock hit a record low on Monday — will be one of the largest aluminum producers from the globe. The company’s collapse has the potential to take a large chunk of aluminum supply via the market. In fact, Rio Tinto — one of the largest mining companies from the globe — said Friday This particular might declare force majeure on some of its contracts with Rusal.
“The main thing which has been a catalyst behind aluminium has been the issues around the sanctions against Rusal which will make the market tighter,” ETF Securities analyst Nitesh Shah told Reuters. “In addition to which will be the weaker dollar as well as the general upside for industrial metals in recent days which will be working in aluminium’s favor.”
Aluminum’s surge comes more than a month after President Donald Trump slapped a 10 percent tariff on aluminum imports to the U.S.
Trump bragged the tariffs were not having a negative effect on the U.S. economy.
He said in an April 6 tweet: “Despite the Aluminum Tariffs, Aluminum prices are DOWN 4%. People are surprised, I’m not! Lots of money coming into U.S. coffers as well as Jobs, Jobs, Jobs!”
Aluminum prices were down for the year when Trump sent his tweet. However, prices have skyrocketed more than 20 percent since the U.S. unveiled sanctions against Russia.
The Washington Post reported, citing people familiar with the matter, which Trump walked back a comment made by U.S. ambassador Nikki Haley about additional sanctions being implemented, noting he was not yet comfortable taking which course of action. Haley said Sunday fresh sanctions on Russian entities might be announced Monday.