(Bloomberg) -- The metals world is beginning its annual ritual of hashing out contracts for the upcoming year with one key question in many traders’ minds: What’s going to happen to Russian supplies?
Terra Co-Founder Do Kwon Faces Arrest Warrant in South Korea
US Inflation Tops Forecasts, Cementing Odds of Big Fed Hike
Stocks Whipsaw as Traders Assess Fed’s Next Steps: Markets Wrap
Xi Returns to World Stage With Putin to Counter US Dominance
Ugly Selloff Pushes Stocks Down Most Since 2020: Markets Wrap
The country is a big producer of aluminum, nickel, copper and palladium, and supply deals signed before the war mean sales have largely kept flowing since the invasion of Ukraine. But September marks the start of what’s known as “mating season,” when new contracts are negotiated, and traders and executives say there’s a growing unwillingness in western manufacturing hubs to receive new Russian metal.
The self sanctioning could disrupt trade dynamics in global metals markets for years, creating schisms between regional markets as those still willing to buy attempt to scoop up Russian metal on the cheap. For aluminum in particular, Europe is usually a key market. Speaking privately, several traders also said they expect significant volumes of Russian aluminum to be dumped on the London Metal Exchange, potentially creating distortions in the global benchmark market.
Read: Metals World Agonizes Over War But Keeps Buying From Russia
Norsk Hydro ASA won’t agree to any new Russian metal, while Novelis Inc. has excluded Russian production from a key tender for new contracts to supply its European factories next year. Buyers overall are increasingly pushing back, although some in southern Europe may be more flexible if they can buy at a discount, according to traders involved in the market who asked not to be identified discussing private information.
“We categorically will not be buying from Russia for 2023,” said Paul Warton, executive vice president for Norsk Hydro’s extruded aluminum products business. “I don’t know where that material will flow to now -- maybe into Asia, China, Turkey, and other areas that haven’t taken as tough a stance on Russian material.”
There are similar trends in other markets where Russia is the dominant supplier, such as nickel and palladium, but aluminum giant United Co Rusal International PJSC is particularly embedded in the European market and some specialized products vital for carmaking and aviation will be hard to substitute. Aluminum is also the market most vulnerable to growing stockpiles of unwanted Russian metal, because China has plentiful domestic production, making it harder to redirect sales eastward.
The shift from Russia also comes at a time when soaring energy costs are squeezing Europe’s domestic aluminum smelters, although Hydro’s Warton said the industry should be able to plug the gap with alternative supplies, such as imports from the Middle East.
Neither Rusal nor nickel and palladium giant MMC Norilsk Nickel PJSC have been sanctioned by the U.S. or Europe.
And while some large buyers are balking, Rusal is planning to keep large shipments flowing to Glencore Plc under a multiyear supply deal that it signed in 2020, according to people familiar with the matter.
For Nornickel, early discussions with customers suggest that European buyers will try to reduce purchases, according to a person familiar with the matter. It’s too early to estimate how big the effect will be, the person said. The company’s large share of global production means its metals are hard to replace, although the miner is prepared to shift some sales eastward.
Spokespeople for Rusal and Nornickel didn’t immediately respond to requests for comment. Glencore declined to comment.
The question of Russian metal also remains a key focus for the London Metal Exchange and its members, according to people familiar with the matter. The exchange doesn’t plan to take independent action against Russian suppliers outside the scope of government sanctions, but is keeping the situation under review, a spokesperson said.
If Rusal’s sales do drop sharply in Europe, the producer may offload excess stocks onto the exchange. Such a move could put further pressure on prices and -- if the bourse becomes a dumping ground for metal that industrial consumers don’t want to touch -- could force it to reassess its stance.
The LME is looking closely at the issue and it is a regular subject of discussion at meetings of the board and metal committees, one of the people said.
“If the demand isn’t there to absorb production then you will be likely to see more deliveries into the LME system,” Nicholas Snowdon, an analyst at Goldman Sachs Group Inc., said at a Fastmarkets aluminum conference in Barcelona. In the context of softer market conditions, self-sanctioning also “increases the likelihood of further deliveries,” he said.
As contractual discussions get underway, the metals industry also needs to weigh the outlook for weaker demand amid global economic gloom, against tightening supply in Europe, where high energy prices have forced smelters to cut back and even halt production.
A key part of the negotiations for deals will be the delivery surcharges that contractual customers agree to pay over futures prices for metal delivered to local ports, and traders are bracing for a big drop. European suppliers say they’re optimistic that the mounting aversion to Russian metal will give them an advantage premiums, while Rusal may need to offer discounts on its delivery premiums to entice buyers.
Most Read from Bloomberg Businessweek
The Ethereum Merge Ups the Stakes—and Reshapes the Crypto Universe
It’s White-Collar Jobs That Are at Risk in the Next Recession
Chinese Manufacturers Get Around US Tariffs With Some Help From Mexico
Tesla’s Autopilot Heads to Trial
A Dubious Truck, a Whistleblower Army, and Inept Spies: Inside the Very Weird Nikola Saga
Amid its bankruptcy proceedings, crypto lender Celsius Network LLC has sought court approval to sell and/or exchange its stablecoin holdings for U.S. dollars in order to generate liquidity and help fund its operations. See related article: Goldman Sachs said to raise US$2B for Celsius assets: report Fast facts “Celsius currently owns eleven different forms of […]
The New Jersey-based company intends to sell their current and any future stablecoins it may receive, as needed, to fund its Chapter 11 cases, according to a court document. The request was filed with the United States Bankruptcy Court Southern District Of New York and a hearing is scheduled on Oct. 6 to discuss the proposed sale, the document showed. Celsius had filed for bankruptcy in New York in July, after it froze withdrawals, citing "extreme" market conditions.
Europe's power crisis, production cuts and shortages of aluminium have left consumers in a quandary about Russian supplies of the metal vital for the region's transport, construction and packaging industries. Some are choosing to shun Rusal's metal, while others are more sanguine - pointing to the fact that neither the company nor its metal is under sanctions imposed on other Russian companies after Moscow's invasion of Ukraine in February. Known in the industry as "the mating season", consumers and producers gathered at a conference in Barcelona this week to agree deals to buy and sell aluminium for next year.
All of the top 25 aluminium futures volume days have occurred since April, with nearly 150 new accounts trading since May, the CME said in a statement. Aluminium prices on the London Metal Exchange hit a record high of $4,073.50 a tonne in early March on supply scarcity due to Russia's invasion of Ukraine. "We have seen an increase in demand from aluminium participants to enhance liquidity and create a more robust alternative market," said Jin Chang, managing director and global head of metals at CME Group.
Shares of Tesla Inc. gained Thursday, after Needham backed away from its bearish view on the electric vehicle giant, saying there are now several potential catalysts that could boost the price, and none that might knock it down.
Russia's economy is not likely to return to pre-war levels before the end of this decade as the Ukraine war and stricter sanctions worsen long-standing economic deficiencies, Scope Ratings said in a report seen by Reuters on Friday. "The Russian government, helped by the Bank of Russia, has used windfall export revenues to mitigate the immediate domestic economic impact of the war in Ukraine and sanctions, but the longer-term outlook has worsened," said Scope analyst Levon Kameryan. About four times as much private capital - $64.2 billion - flowed out of Russia in the first quarter of 2022 alone compared with the same quarter last year, said the report.
Long simmering tensions between Giorgia Meloni, tipped to become Italy's next prime minister after this month's election, and her ally Matteo Salvini, head of the rightist League, have bubbled to the surface 10 days before the vote. Meloni's nationalist Brothers of Italy group is widely forecast to leapfrog Salvini's League at the Sept. 25 ballot and emerge as the country's largest party, ensuring victory for their conservative alliance that also includes Forza Italia. However, friction between the two has become increasingly apparent, especially over how to respond to the energy crisis, with Meloni rejecting Salvini's calls for massive government spending to help people pay their utility bills.
Despite strong fundamentals, sellers have knocked Costco stock lower ahead of its quarterly earnings report.
FedEx has blown three tires before the peak holiday shipping season, and chatter on the Street is that mighty Amazon may have played a role.
Mizuho analyst Vijay Rakesh just lowered his price target on Nvidia, but if he's right it's a good buy from here.
Struggling Bed Bath & Beyond Inc. releases a list of dozens of stores it aims to close. Most of the stores on this list will close by the end of the month.
Central banks are like “reformed smokers,” famed investor Stanley Druckenmiller says. “They’ve gone from printing a bunch of money, like driving a Porsche at 200 miles an hour, to not only taking the foot off the gas, but just slamming the brakes on.”
In this article, we will take a look at the 10 Blue Chip Stocks to Buy Now According to Billionaire George Soros. To skip our analysis of George Soros’ profile, investment strategy, and 13F holdings, you can go directly to see the 5 Blue Chip Stocks to Buy Now According to Billionaire George Soros. George […]
As bad the news was for FedEx, it may be worse news for the U.S. economy --- and an early sign of a recession.
NIO Inc. stock is trending on the Yahoo Finance Platform. Here is a visualization of $NIO performance over time, how that performance compares to the wider industry, and analyst projections for the current quarter.Check out the ticker page here.
Income investors are always on the hunt for good stocks that for one reason or another have recently been out of favor, creating a scenario for a higher dividend yield along with possible future appreciation as the stock bounces back. Buying a stock on a decline sometimes involves a bit of courage, but the ability to lock in long-term higher yields makes the decision easier for most investors. At the moment, Medical Properties Trust Inc. (NYSE: MPW), a Birmingham, Alabama-based real estate inves
FedEx turned in poor earnings results and slashed its revenue forecast on Thursday as the company’s CEO warned that a “worldwide recession” is likely coming.
After three months of highly volatile trading, which have seen the S&P 500 drop down toward 3,600, rally up to 4,300, and fall back down to 3,900, investors can be forgiven for feeling some whiplash. The question that needs answering, however, is where will the markets go from here? Morgan Stanley strategist Andrew Slimmon believes that investors shouldn’t worry too much about the bear case. Worse-than-expected inflation numbers for August may have pushed the markets into a tumble this week, but
It's no secret that investors are worried about runaway inflation. Cathie Wood and Elon Musk see deflation as the bigger threat.
Wall Street is on a roller coaster again, as investors try to navigate the path between high inflation and the Fed’s aggressive interest rate hikes. What we know for certain is that the S&P 500 is down 18% year-to-date, and the NASDAQ is down 26%. At least one investing expert, however, is getting on his soapbox to encourage investors to buy now, while prices are low. This is the view of Shark Tank investor Kevin O’Leary. The venture capitalist makes a case for investors to take advantage of vol