In response to sanctions from the US and UK, the London Metal Exchange (LME) has prohibited the acceptance of newly produced Russian metals. However, it will continue to accept Russian metals produced before April 13, provided it can be verified that these metals are not affected by the sanctions.
This decision by the LME to differentiate between new and old Russian metal supplies is anticipated to potentially lead to a significant influx of pre-sanction Russian metals into the market. This situation may result in fluctuations and discrepancies in pricing within the metals market.
The LME's adherence to the sanctions reflects its commitment to comply with international regulations, despite the ongoing debate within the metals trading community. Some argue for a total ban on Russian metals to prevent market saturation which could depress prices and undermine the LME's role as a global pricing benchmark.
LME CEO Matthew Chamberlain has acknowledged the uncertainty the sanctions bring to the market, suggesting that traders might offload older Russian metal stocks onto the LME as a precautionary measure. This could lead to a notable increase in the supply of Russian metals at the exchange.
The LME has highlighted that a significant portion of its metal stocks, particularly aluminum, originates from Russia. Despite this, there has been a steady flow of Russian aluminum deliveries from LME warehouses, indicating continued market acceptance for these metals.
In 2022, the LME considered a complete ban on Russian metal deliveries but decided against it, citing sufficient market demand for these metals. The UK's trading restrictions on Russian metals include exceptions that allow transactions on the LME, ensuring continued trade under specific conditions.
The LME will evaluate on a case-by-case basis the eligibility of Russian metal produced before the cutoff date for delivery. Additionally, UK members wishing to withdraw old stock must communicate with the UK Department for Business and Trade, as per the exchange's guidelines.
