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The London Metal Exchange (LME) has taken a decision to not ban metals, including aluminium and nickel, from Russia from being traded and stored in its system.
The decision is based on metals industry feedback, which determined that a significant portion of the LME will still consider purchasing or even relying on Russian metal in 2023.
In the wake of Russia’s military offensive against Ukraine, sanctions were imposed by the US and European nations on several companies. However, metals and the companies that produce them were not targeted by Western sanctions.
Said to be the world’s oldest and largest market for industrial metals, LME initiated a discussion paper in October 2022 on the subject seeking market opinion on the possibility of banning metal from Russia.
The formal discussion comes in response to calls from Alcoa and other large suppliers to impose a ban on Russian metal from the LME as several users avoided it in their contracts.
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Based on the discussions, the LME said it was ‘likely that additional tonnages of Russian metal will’ ultimately be delivered into its warehouses, without a ban.
In a press statement, LME said: “The LME does not propose at this time to prohibit the warranting of new Russian metal nor to impose thresholds or limits to the amount of Russian stock permitted in LME warehouses.
“While there is evidently an ethical dimension as to the global acceptability of Russian metal, we believe the LME should not seek to take or impose any moral judgements on the broader market.”
The exchange, however, said it will continue to monitor the Russian metal flow in LME warehouses.
It will also publish regular reports from January 2023 outlining the Russian metal percentage warranted in warehouses to maintain transparency.