CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
The head of the largest US aluminum producer is warning analysts that London Metal Exchange warehouses are poised to be inundated with Russian-origin material, rendering the global benchmark disconnected from the real market price.
Alcoa Corp. chief executive Roy Harvey said aluminum from Russia now accounts for 53% of the total stockpiles in global LME warehouses, up from just 5% before the Eastern European nation invaded Ukraine in February 2022. Speaking on a conference call Thursday, Harvey said the company expects further stockpiling of Russian material to continue through the year and into the future, which will eventually distort the exchange’s benchmark price.
The US in February announced a 200% duty imposed on all imports of Russia-made aluminum in a move to keep pressure on Moscow a year after its invasion of Ukraine. The move is now making metal from the country less desirable to buyers, especially in Europe and the US.
“I can’t tell you when the market starts to get more and more distorted, but at some point the only thing left in LME warehouses will be metal that is only consumed by a small group of non-Western producers,” Harvey said. The market will get to a point where the LME price is “based off these inventories” that “nobody wants,” he said.
“That’s just not a place that we want to be,” he said.
Harvey said it isn’t “sensible” that the rest of the world continues to curtail capacity while Russian producers continue to operate at full capacity. Russia is the world’s third largest producer of the metal, according to researcher Harbor Intelligence.
(By Joe Deaux)
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