LME will no longer accept new metals in its US warehouses affected by new Russia sanctions
by David Fleschen
The London Metal Exchange (LME) has announced that it will no longer accept new metals in its US warehouses that are affected by the new sanctions against Russia. These include primary aluminium, copper, lead and (North American special) aluminium alloys. The LME justifies the move by saying that there is a risk that the metals would be difficult to import into the US or, due to the punitive tariffs, only at greater expense, so that prices would have to trade at a discount, which in turn would depress the LME price overall and thus lead to a market distortion.
The exchange points out that there are currently no metals of Russian origin (with the exception of North American Aluminium Special Alloys, or NASAAC for short) in US warehouses, so the move is not expected to have a major impact. Similarly, the exclusion of Russian metals from UK LME warehouses after the government in London imposed punitive tariffs on metals from Russia last year. This should explain why the market reacted with little surprise to the announcement.
Source: Commerzbank Research, Photo: Fotolia