Metals Tied to Russia Slide on Softer Sanctions Position
April 23 2018 - 9:39AM
Dow Jones News
By Amrith Ramkumar and Alistair MacDonald
A number of metals tied to Russia tumbled Monday after the U.S.
Treasury softened its stance regarding sanctions against United Co.
Rusal, the world's second-largest aluminum producer.
Aluminum for delivery in three months on the London Metal
Exchange plummeted 7.2% to $2,292.50 a metric ton, while nickel
shed 3.8%. The most-actively traded palladium futures in New York
dropped 5.4%.
The metals had surged since April 6, when the U.S. announced
sanctions against Rusal and owner Oleg Deripaska. Because Rusal
owns more than 25% of Norilsk Nickel Mining & Metallurgical Co,
a major nickel and palladium producer, recent volatility has also
sparked a rally in those metals.
But on Monday, the U.S. hinted it would provide sanctions relief
to Rusal if Mr. Deripaska divests his holdings. It also extended
its deadline for companies to wind down dealings with the company
to Oct. 23.
A number of Western institutions, including the LME and CME
Group Inc.'s Comex, have sought to distance themselves from Rusal
since the sanctions were announced April 6, leading to massive
swings in stockpiles and prices.
Monday's news could cause the recent rally to reverse as traders
wonder whether metals markets might not be impacted at all by
sanctions, said Simona Gambarini, commodities economist at Capital
Economics.
"It just is evidence of the volatility in the market and how
much uncertainty is priced into the market at the moment," Ms.
Gambarini said.
Aluminum had risen as much as 33% from April 6 at one point
Thursday and pierced $2,700, but has fallen more than 15% since
then. Nickel and palladium have also swung wildly in recent
sessions.
Elsewhere in base metals, copper for May delivery fell 1.2% to
$3.0980 a pound on the Comex division of the New York Mercantile
Exchange, following other industrial metals lower. Prices have
fallen about 5.5% in 2018 with investors worried about an economic
slowdown in China, the world's largest consumer of copper, and
possibly oversupply.
Among precious metals, gold for June delivery declined 0.8% to
$1,327.00, extending a recent slide with the yield on the benchmark
10-year U.S. Treasury note approaching 3% and the dollar
strengthening. Gold struggles to compete with yield-bearing assets
like Treasurys as interest rates rise and becomes more expensive
for overseas buyers when the dollar climbs.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Alistair
MacDonald at alistair.macdonald@wsj.com
(END) Dow Jones Newswires
April 23, 2018 10:24 ET (14:24 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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