LONDON (Reuters – Nickel and aluminum prices reached new highs Tuesday following Russia’s order to send troops to eastern Ukraine. The move raised concerns about war, and could lead Russia sanctions that might prevent it from exporting.

Russia is home to around 6% and 7% respectively of world-mined aluminium. In just days, the price of aluminium shot up by 35% due to sanctions on Rusal Aluminium in 2018.

After reaching $3,380 in official trading, benchmark aluminium traded on the London Metal Exchange, (LME), was 2.6% higher at $3,366 per tonne. This is just below 2008’s $3,380.15 record.

After rising by 42% in 2021, the metal used for packaging and transportation is now up 20%.

LME nickel rose 2.1% to $24,850 per tonnes after hitting $24,925. It was the highest price since 2011. Nickel is used in the manufacture of stainless steel, and in batteries for electric cars. It has risen by 25% this year after rising 25% in 2021.

Wenyu Yao, an analyst at ING, stated that even with Russian exports being flowing, the metals remain undersupplied.

She stated that “Before the Russia-Ukraine crises escalated, they were already observing very strong fundamentals.”

RUSSIA: On Tuesday, the United States and its European allies will announce sanctions against Russia. Britain has sanctioned 5 Russian banks, 3 men, and Germany has halted Nord Stream 2’s gas pipeline project.

MARKETS. Global markets recovered losses while investors still believed that Moscow would not move further into Ukraine. The oil prices reached a seven-year high. [MKTS/GLOB]

SANCTIONS RISK: Analysts say it is unlikely that Western countries will impose broad sanctions against Rusal because of the high prices for aluminium, which would cause damage to manufacturing.

ALUMINIUM – Shortages in LME warehouses have reduced inventories to 835.125 tonnes, which is a drop of almost 2,000,000 tonnes per month in March 2013.

Over the 3-month contract, the premium for cash aluminum is at its highest level since 2018. Duty-paid physical premiums have also risen in the United States and Europe to new records.

NICKEL – Stocks of LME-registered steel have declined to 82.314 tonnes after more than 260,000 tonnes was recorded in April. The premium paid for cash nickel over 3-month metal has risen to its highest point since 2009.

CHINA: China was the world’s largest consumer of metals. It announced it would increase taxes and fees and raise payments to local governments as a way to make up for its lost revenues in support of a slowing economy.

AUTHORITIES: Benchmark rose 0.5% to $9,949 per tonne. Zinc rose 1.2% at $3,602, while lead dropped 0.4% at $2,324.50. Tin was 0.5% higher at $44,350