Rio Tinto will be among biggest winners from U.S. sanctions imposed on Rusal
The United States on Friday imposed the sanctions against businessmen, companies and government officials that are considered associates of Russian President Vladimir Putin in one of Washington’s most aggressive moves to punish Moscow for a range of activities.
Rusal, the world’s second-largest aluminium producer, and its former President Oleg Deripaska were included on the list. Rusal said the sanctions “may be materially adverse to the business and prospects of the group.” Shares plunged 50 percent in Hong Kong on Monday.
Traders and analysts said the sanctions would accelerate a rerouting of global aluminium shipments that began last month after the U.S. imposed a 10 percent duty on aluminium imports under the so-called “Section 232? of U.S. trade laws. “It probably reroutes a lot of the trade flows,” said analyst Daniel Morgan at UBS in Sydney. “It is beneficial if you are a producer that is (compliant with the section 232 tariffs) because you’ve got an ability to sell into the U.S. and other markets.”
After U.S. President Donald Trump announced the tariffs, he later exempted the European Union and other trading partners including Canada and Australia until May.
The new sanctions on Rusal would disrupt unwrought Russian aluminium imports, which in 2017 were 695,778 tonnes out of a total of about 5 million tonnes, according to the International Trade Centre (ITC).
Rio Tinto would be well placed to replace that metal with any unsold metal if the sanctions stuck, Paul Adkins, managing director of consultancy AZ China said. Rio Tinto declined to comment.
U.S. aluminium premiums traded at 18.4 cents per pound, or about $405 per tonne on top of futures prices
The company produced 3.6 million tonnes of aluminium last year from its operations including in Canada and Australia, which are exempted from the section 232 tariffs.