LME, CME block trade of Russian aluminum, copper, nickel: UK govt

The London Metal Exchange and Chicago Mercantile Exchange have blocked the trade of aluminum, copper and nickel produced by Russia, the UK government said late April 12.

It said the move brought the two exchanges into the scope of existing bans to clamp down harder on prohibited Russian metal exports and would reduce a "crucial source of revenue for the Kremlin."

To minimize the risk of market instability, the government said the new measures would exempt the existing stock of Russian metal on the two exchanges so that they could still be traded and withdrawn, with no restrictions on acquiring existing stockpiles of Russian metals already on exchange.

It added that the action did not cover titanium or platinum group metals, such as platinum and palladium, which were not included in the UK's prohibition in December "due to supply chain sensitivities."

The LME said in a separate release that it reflected all relevant sanctions and tariffs in its operations and would therefore take steps, in collaboration with LME Clear, to implement the sanctions for its own operations and those of its market.

The LME published guidelines on how the UK legislation and trade licenses affected the position of Russian metal for the LME, LME Clear, members and clients.

It said in separate guidelines published April 13 that the amended sanctions package enabled the LME, LME Clear, UK members and UK clients to continue to acquire Russian warrants, which included the issuance, creation and holding of such warrants and rights in such metal in accordance with the rules of the LME, as long as the metal was produced before April 13, 2024. After that date, the metal was prohibited.

"As a result of this, the LME will be imposing an immediate suspension on the warranting of relevant metal produced on or after April 13 ...Through this action, the LME and LME Clear are taking appropriate steps to enable continued participation in the daily settlement process by members and clients," the LME said.

The LME also announced a suspension on placing metal produced by specific affected brands on warrant in LME-listed warehouses globally, unless the metal owner could establish with clear documentary evidence that it metal was produced before April 13.

Exports worth $15 bil in 2023

The government noted that metals were Russia's largest export commodity after energy, although the value of metal exports had been decreasing since the Ukraine invasion, dropping from $25 billion in 2022 to $15 billion in 2023 due to sanctions.

The LME three-month nickel price closed at $7,797/mt April 12, up 7.2% since the start of 2024.

"By taking this action in a targeted and responsible manner, we will reduce Russia's earnings while protecting our partners and allies from unwanted spillover effects," US Secretary of the Treasury Janet L. Yellen said in the UK government's statement.

The UK announced its intention to ban Russian metals in May 2023 and legislation to directly ban Russian metal imports, including aluminum, copper and nickel, was introduced in December. The US also separately put tariffs on various Russian metal imports in place.

The two countries had jointly brought the LME and CME into the scope of the measures, which the UK government said reinforced a shared commitment to constrain Russia and support Ukraine.

"This follows a dialogue between the two countries to maximize the impact of the policy, which is a technically complex measure requiring time to work through the details to ensure its effectiveness and minimize the risk of market disruption," the UK government said.

"We have now imposed extensive trade sanctions on Russian-origin oil, gas, gold, diamonds, iron, steel, and base metals, dealing a heavy blow to Putin's war economy. But we must continue to work with our allies to further tighten the screws on the Kremlin," UK Sanctions Minister Anne-Marie Trevelyan said.