In the wake of US sanctions on Rusal, the world’s second-largest aluminium producer founded by Chelsea owner Roman Abramovich, the price of the crucial metal began to increase rapidly. The sanctions were imposed on what are seen as key allies of the Putin regime in retaliation for the Kremlin’s support for Assad in the Syrian Civil War as well as for ‘malign activity’ which includes interference in the US Presidential Election of 2016.
In a statement announcing the new sanctions Steven Mnuchin, US Treasury Secretary, said:
The Russian government operates for the disproportionate benefit of oligarchs and government elites. Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.
Donald Trump has been facing domestic difficulties, as he is alleged to have benefited from Russian interference in the November 2016 vote. His campaign is being investigated by Robert Mueller, the former head of the Federal Bureau of Investigation, for any collusion or coordination with Russian agents during Trump’s candidature.
Goldman Sachs warns that the price of aluminium may reach $3,000. Before the sanctions against the Russian producer, the price per ton of the metal was stable around $2,000. The rally may retreat once other sources of aluminium are secured. China, the world’s largest producer of aluminium, may become even more important to the global aluminium market
However, Donald Trump has announced a 10% tariff on imports of aluminium, as well as a 25% one on steel, in retaliation for what he said were unfair trade practices used by China. The US imports nearly 6m tons of the metal, according to the latest figures, and only 6%, or roughly 360,000 tons, came from China. If Russian exports do fall, it may have to be China which picks up the slack. This could cause prices to rise in America for a lot of consumers and producers.
This post first appeared on The Market Mogul.
