The London Metal Exchange published data showing that Russian metal has been flowing into its network of warehouses in recent months, but said that the increase was in line with its expectations and that consumers were still accepting it.
(Bloomberg) — The London Metal Exchange published data showing that Russian metal has been flowing into its network of warehouses in recent months, but said that the increase was in line with its expectations and that consumers were still accepting it.
The data, showing that metal from Russia now accounts for 94% of live copper inventories, 41% of aluminum and 16% of nickel, are likely to stoke a debate that has been going on for months over whether the LME should be allowing Russian metal to trade on its exchange. After a market consultation late last year, the exchange decided it would not take action beyond that compelled by western sanctions.
It announced at the time that it would begin publishing monthly data from January to increase transparency. Some big western aluminum producers had lobbied for an embargo, arguing that a trend toward “self sanctioning” by buyers could result in unwanted Russian metal being dumped on the LME, distorting prices on the exchange.
At the time, the LME said it had been told by market participants that many consumers were still accepting, and even relying on, Russian metal.
“The LME’s conclusion (based on market feedback) that Russian metal continues to be consumed is supported by data on the outflow of Russian metal from LME warehouses,” it said in the notice on Thursday.
Read: London Metal Exchange Decides Against Ban on Russian Metal
While the US and Europe have imposed sweeping sanctions on Russia in response to the invasion of Ukraine, the metals traded on the LME have largely avoided blanket restrictions.
The market’s focus has returned to the issue this week after a surge in deliveries in South Korean warehouses that are seen as attractive storage locations for Russian metal, and following a Bloomberg report that the US is preparing to impose a 200% tariff on Russian-made aluminum.
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