EU moves to phase out Russian aluminum in latest sanctions package

The European Union is set to adopt its next package of sanctions against Russia ahead of the third anniversary of the invasion of Ukraine on Feb. 24, 2022, with a ban on Russian aluminum among the incoming measures.

"I welcome the agreement on our 16th package of sanctions," European Commission President Ursula von der Leyen said Feb. 19 in a message on the X social media platform.

"The EU is clamping down even harder on circumvention by targeting more vessels in Putin's shadow fleet and imposing new import and export bans," she added.

So far there has been no official statement from the EU detailing the new measures, but following a press briefing in Brussels mainstream media have reported that a comprehensive ban on the EU's imports of Russian aluminum will be included.

This is expected to displace just over 340,000 mt of aluminum from the EU market, representing around 9% of Russian primary aluminum major Rusal's 3.85 million mt/year output.

One market source said he did not expect any immediate impact on the aluminum market as the ban would be "a phased-in thing," adding that "nothing is expected until next year."

Last year, the EU reduced its purchases of Russian unwrought aluminum under HS code 7601 by a third year over year to 340,250 mt with the volume comprising less than 6% of its total 5.8 million mt aluminum imports, data from S&P Global Market Intelligence's Global Trade Analytics Suite shows.

Over 2020-2022, imports from Russia averaged 801,100 mt/year, accounting for 13.5% of the bloc's total imports.

The EU had already banned imports of aluminum wire, foil and extruded products in November 2023, but until now semi-finished aluminum has avoided trade measures despite industry group European Aluminium lobbying for a blanket ban.

A Moscow-based analyst, who wished to be unnamed, told Platts that Canada could easily "close the gap" in lost Russian supplies if the US goes ahead with tariffs on Canadian aluminum or if Canadian aluminum producers choose to preemptively diversify away from the US.

The US imported about 2.7 million mt of unwrought aluminum from Canada in 2023.

"But [the EU's ban on Russian aluminum] is rather an attempt to boost the price of the metal to support European producers," the analyst said.

The LME three-month contract aluminum price closed at $2,668/mt on Feb. 18, having climbed 2.5% from $2,603/mt on Feb. 13.

The analyst also said that after the introduction of CBAM next year, having this ban already in place would give the EU a legitimate reason not to let low-carbon aluminum from Russia into its markets.

Rusal claims that its access to ample hydropower provided by its shareholder energy company En+, along with its proprietary inert anode cell technology, enables it to produce aluminum -- known under Allow and Allow Inerta brands -- with Scope 1 and 2 emissions of 0.01-2.4 mtCO2e per ton of metal, which favorably compares with the global aluminum industry's average of 12 mtCO2e.