LME aluminium rose over 2.5% in morning trade today following reports of plans for a new wave of US sanctions against Russia. US President Joe Biden said the US plans to unveil a “major” sanctions package against Russia on Friday. Although he wasn’t specific about which industries would be affected, this has left the market speculating that Russia’s metals industries may be targeted. In December, the UK restricted British individuals and entities from trading physical metals including aluminium, copper and nickel from Russia, while also hinting at a possible coordinated action with international partners. The UK is the only country in Europe to have adopted such measures. This could also lead the LME to reopen the debate on whether it should ban deliveries of Russian metal. The market will be now awaiting clarity on how far-reaching any US sanctions might be.
Meanwhile, recent numbers from the International Aluminium Association (IAI) show that monthly aluminium output rose 2.4% YoY to 6.04mt last month, following higher production from almost all major producing countries. Chinese output is estimated to have increased 2.8% YoY to 3.56mt last month. Meanwhile, aluminium production in Asia (ex-China) jumped 5.5% YoY to 406kt in January. However, production in Western and Central Europe reported marginal gains of 0.4% YoY last month.
Elsewhere, the International Copper Study Group’s (ICSG) latest update shows that the global copper market remained in a marginal supply surplus of 20kt in December 2023. Meanwhile, the Group estimates a total deficit of 87kt for the whole of 2023 following subdued mine production and higher demand (especially in China). Global mine and refined copper production increased by 1% YoY and 6% YoY, respectively, while overall apparent refined demand increased by 4% YoY in 2023.
Steel inventories at major Chinese steel mills rose significantly to 15.1mt in early February, up 23.8% compared to late January, according to data from the China Iron and Steel Association (CISA). Crude steel production at major mills rose 2.6% from late January to 2.07mt/d in early February.
The latest LME COTR report released yesterday shows that investors boosted net bullish positions for copper by 1,217 lots to 66,675 lots in the week ending on 16 February. Similarly, net bullish bets for aluminium rose by 1,274 lots to 119,976 lots at the end of last week. In contrast, money managers reduced net bullish bets for zinc by 9,545 lots for a third straight week to a record low of 11,033 lots as of last Friday.
