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January 29, 2019
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Rusal shares soar, aluminum falls as U.S. lifts sanctions
Della Sun
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[REPORTER STAND-UP]
The United States has lifted sanctions on the world’s second-largest aluminum producer Rusal, pushing aluminum prices down and lifting shares in Rusal up.
[VO]
Aluminum prices on the London Metal Exchange dropped 2 percent today to near $1,880 a tonne.
[VO]
Prices of aluminum have dropped 30 percent since hitting a seven-year high of over $2,700 a tonne in April after the sanctions were imposed.
[VO]
The United States is a major consumer of aluminum. It is expected to account for 5 to 6 million tonnes of demand this year in a market estimated at 68 million tonnes.
[VO]
The premium for shipping to the United States stands at around $420 a tonne, double the $200 a tonne seen at the start of 2018.
[VO]
For European consumers, premiums at $69 a tonne, down nearly 60 percent since early May, are expected to drop further due to high stocks of aluminum held by traders in the region.
[VO]
Today, the London Metal Exchange lifted its suspension on storing Rusal-produced metal in approved warehouses, effective immediately.
[VO]
As part of the deal to lift the U.S. sanctions, Rusal’s chairman Jean-Pierre Thomas resigned, as well as several board members from Rusal’s parent company, En+ Group, appointing new directors in a move to satisfy U.S. Treasury demands that the boards be made up of independent directors.
[VO]
Rusal supplied only around 10 percent of the U.S. aluminum market in 2017.
[VO]
Canada, with a share of more than 50 percent, is the largest supplier to the United States.
[REPORTER SIGOUT]
If tariffs are lifted or Canada is exempted or gets quotas, premiums could fall much further.
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