Published: Thu, April 26, 2018
Finance | By Jaime Brady

United States mulls sanctions reprieve for Rusal, rocking aluminum prices

United States mulls sanctions reprieve for Rusal, rocking aluminum prices

Aluminum steadied after a four-day selloff that accelerated after the USA decision to ease sanctions against United Co.

"Aluminium is going to remain volatile depending on how the sanctions play out, but at the end of the day it will return to the range either side of $2,200 until we see evidence of stronger economic growth". That's good to know for both strategic and tactical purposes.

With the company ostensibly sidelined for an indefinite period of time, global aluminum prices surged to a six-year high, while Rusal's share price plummeted by more than half.

Now Mnuchin said Treasury could "provide sanctions relief" if Deripaska sold the company.

En+ owns hydropower plants in Russian Federation and nearly half of Rusal, the Hong Kong-listed aluminium producer that uses much of the electricity En+ generates. In the long run, that exposure to all the commodities involved in aluminum production is a positive, Deutsche Bank analyst Chris Terry said in a Monday note hiking Alcoa's price target to 70 from 60, apparently just ahead of the Rusal news.

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The sanctions caused a steep selloff in Russian stocks and the ruble, and Rusal, the world's second-largest aluminum maker, was one of the hardest hit companies.

The US Treasury gave Americans until October 23 instead of June 5 to wind down business with Rusal and said it would consider lifting the sanctions if Rusal's major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.

The administration's official position is that the sanctions will still go into effect eventually, if Oleg Deripaska does not divest and relinquish control of the firm.

Last week, palladium hit US$1,040 per ounce - its highest price since February - in what many executives attributed to fears that the U.S. -Russia trade spat would create a shortage of the precious metal, mainly used by the automotive industry. Other metals prices and crude oil also retreated somewhat.

Rusal declined to comment on requests from worldwide media, while Deripaska's spokeswoman wasn't immediately available. Shares of its USA rival Alcoa Corp were down 11 percent in morning trading.

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