The US Treasury Department officially lifted sanctions late yesterday on Russian primary aluminum smelter Rusal, paving the way for a major supplier of extrusion billet and P1020 to begin selling into the US market again.
Following the move, the London Metal Exchange will once again allow trading and warranting of the company's primary aluminum. One of the largest primary aluminum producers outside of China, Rusal's return to the market is expected to have a bearish impact on regional metal premiums, especially in the US where high-purity scrap, a P1020 alternative, is already abundant.
While P1020 premiums rose slightly in the wake of the sanctions, the action had an outsized effect on US extrusion billet premiums.
Premiums for 6063 extrusion billet jumped by 33pc in the week following the sanctions announcement and have not so far returned to pre-run up levels.
Argus assessed premiums at 13-14¢/lb in the latest week, up from 9.5-10¢/lb during the same period in 2018, before the April 2018 announcement.
The sanctions were applied in April 2018 by the US Treasury's Office of Foreign Asset Control after then-Rusal head Oleg Deripaska was accused of participating in "malign activities," including allegations of trying to subvert western democracies.
Senate Democrats attempted earlier in January 2019 to delay the removal of sanctions on Rusal, En+ Group and EuroSibEnergo, all companies associated with Deripaska. The measure failed to move forward by the 18 January deadline.
Deripaska himself is still bound by US sanctions.
