Aluminum Prices Rise Amid EU Sanctions Discussions and Chinese Production Constraints

Aluminum prices edged higher as the European Union considers restrictions on imports of Russian metal, while Chinese production growth is expected to slow. On the London Metal Exchange (LME), aluminum climbed as much as 0.7% toward $2,600 per ton, trading 0.2% higher at $2,564 per ton by mid-morning in Shanghai.

The EU is weighing new sanctions on Russian aluminum as part of a broader package targeting Moscow for its invasion of Ukraine. According to sources familiar with the discussions, the restrictions could be implemented gradually, with details still under consideration. Russian aluminum shipments to Europe have already decreased significantly due to self-sanctioning by manufacturers and a restructuring of global supply chains. This has led to increased exports to China, where imports of Russian aluminum more than doubled over the past two years to exceed one million tons annually.

The potential impact of additional sanctions on trade volumes may be limited, as the market has largely adjusted to the changes, said Gao Yin, an analyst at Shuohe Asset Management Co. “The market isn’t in urgent need of Russian aluminum,” Gao noted.

In China, the aluminum industry is facing a turning point as capacity limits are expected to slow production growth. According to Shanghai Metals Market, this shift could reduce the availability of Chinese aluminum for export and provide further support for prices. China remains the world’s largest aluminum producer.

Elsewhere in metals trading, zinc and copper on the LME fell 0.4% and 0.3%, respectively. In Singapore, iron ore prices rose 0.2% to $100.40 per ton, while contracts on the Dalian Commodity Exchange were flat.