Aluminum rises 5.0% as Australia bans Russian exports over Ukraine invasion

• Aluminum remains firmer amid supply crunch fears, mounting sanctions on Moscow.
• Australia banned exports of alumina and aluminum ores to Russia.
• Ukraine’s rejection of Russia’s demand to surrender in Mariupol adds to the risk-off mood.
• PBOC inaction, China’s COVID-19 numbers test bulls amid a sluggish session.

Aluminum prices remain on the front foot around $3,535, up nearly 5.0% heading into Monday’s European session. Reuters adds futures data for Aluminum while saying, “The most-traded May aluminum contract on the Shanghai Futures Exchange gained 2.1% to 23,055 yuan ($3,624.37) a tonne, having earlier hit its highest since March 8.”

The metal’s latest gains could be linked to Reuters’ news suggesting, “London aluminum prices jumped as much as 4.8% on Monday, as fears of supply disruption resurfaced after Australia banned exports of alumina and aluminum ores to Russia amid mounting sanctions on Moscow for its invasion of Ukraine,” The news also adds, “The move will limit Russia's capacity to produce aluminum, which is a critical export for Russia, the Australian government said.”

Other than the demand-supply matrix, risk catalysts also challenge aluminum prices of late. It’s worth noting that the escalated shelling in Ukraine by Russian forces joins Kyiv’s rejection of Moscow’s demand to surrender Mariupol to portray the recent geopolitical risks. On the same line is the attack on Saudi Arabian oil plants by Yemen’s Houthis, as well as an increase in China’s covid numbers and a suspension of trading in Hong Kong by the troubled real estate firmer Evergrande.

Given the escalating concerns over further sanctions on Russia, the supply crunch may intensify, which in turn could propel the metal prices.

However, today’s call of US President Joe Biden with the leaders of Europe and the UK will join comments from ECB President Christine Lagarde and Fed Chairman Jerome Powell to direct short-term moves.