The new US and UK sanctions on Russian metals should be good for aluminum, copper and nickel producers, analysts at Jefferies suggest, as prices are likely to gain support.
The ban applies to metal produced after 12 April, with preexisting stocks exempt from the sanctions.
"We expect this ban to have the most significant impact on aluminum prices, but it is also likely to drive prices of copper and nickel higher," said Christopher LaFemina of the Jefferies metals and mining team, adding that this should be positive for shares of aluminum producers such as Alcoa (NYSE:AA).
New Russian aluminium, copper, and nickel will not be traded on the London Metal Exchange and the Chicago Mercantile Exchange, which follows a period of significant dominance of Russian aluminum in LME stocks, peaking at 91% in March.
Imports of new Russian metals are now prohibited in the US and UK, although imports into the US had already basically fallen to zero and imports in the UK had already been banned as of December.
US treasury secretary Janet Yellen stated the sanctions aim "to target the revenue Russia can earn to continue its brutal war against Ukraine."
The analyst believes it could initially lead to volatile metal prices, especially aluminum, which might rebase higher as market distortions are corrected.
"We have not heard arguments from industry participants that Russian supply is artificially depressing the copper price.
"But still, if commodity traders stop handling these metals from Russia as a result of sanctions, the path for these metals to get to the global market could be dislocated, leading to higher prices."
In the broader context, Russian metals' influence on copper and nickel prices is less pronounced, with markets for these metals already tight and robust demand across origins.
Nonetheless, LaFemina noted the potential for higher prices across all these metals as traditional trading paths are disrupted.