#hurt #sanctions #immediately #brought #brutal #increase #prices
The United Kingdom and the United States wants to prevent the Kremlin from using even more money for its war effort. That’s why the sanctions as a further step, he forbade the Chicago Mercantile Exchange (CME) and the London Metal Exchange (LME) to trade with contracts based on April 13 and after in Russia produced aluminium, copper obsession nickel.
In early morning trading, it was accordingly aluminium its price on the LME was also 9 percent above the previous day’s closing value. This is the largest one-day jump since trading began in 1987.
The use of aluminum is extremely broad. It is used to make products such as car and aircraft bodies, tin cans, film and televisions. A sustained increase in its price will probably once again run through the entire economy. It would drive up prices throughout the economy, and it has potential inflationary can cause problems, just when this is the main problem for the biggest central banks.
A Goldman Sachs however, its analysts believed that the ban is unlikely to threaten supply in the long term. They wrote to their customers, Russian producers can still sell the metal to non-UK and US markets – from this point of view, the current structure does not have an immediate tightening effect or disruption of the trade flow to Western markets. For the time being, the price of copper moved up by 2.9 percent on the developments.
Five percent of the world’s aluminum production, six percent of nickel production and four percent of copper production come from Russia. In the warehouses serving the London Metal Exchange, in March, the proportion of metals of Russian origin within the stocks was 91 percent, for copper this rose from 52 percent to 62 percent in February. The proportion of Russian nickel was 36 percent. The Chicago Stock Exchange did not want to disclose similar ratios to his question.
Producers, as well as consumers, were already concerned about the high proportion of metals of Russian origin in London stocks. Of the latter many have been avoiding raw materials of Russian origin since the start of the Russian attack on Ukraine, fearing sanctions. Britain banned the import of base metals from Russia in December and said it would extend the ban to auxiliary materials if this could be done in consultation with international partners.
The spot price of copper on the London Metal Exchange
Image: Economx, economx
Regardless, Wall Street’s big investment banks are very optimistic about the expected development of the world market price of copper. Last week Citi analysts have said that, in their opinion, the second sustained recovery in the price of copper this century may begin, about 20 years after the first such cycle. According to their expectations, the price of copper will rise in the coming months:
- it may reach $10,000/ton from the current level of $9,333/ton by the end of the year;
- and rises to $12,000 by 2026 under the baseline scenario.
At the same time, Bank of America analysts also raised their forecast for the price of copper. True, they raised the target price to only $9,321 by the end of the year from the previous level of $8,625. They see copper is at the epicenter of the energy transitionwhich means that the lack of supply growth is acutely felt.
Its limited availability is increasingly limiting the production of Chinese smelters and refineries, potentially pushing consumers of the refined metal back to international markets. At the same time, American and European demand should pick up again as economies bottom out. This, as well as the growing demand resulting from the transition in the energy industry, will probably lead the copper market to a deficit this year they added.
Information
The information and analyzes on this page reflect the private opinion of the authors. The writings appearing on this page do not implement CXXXVIII of 2007. Act (Bszt.) Section 4 (2). investment analysis according to point 8 and investment advice according to point 9.
When making any investment decision, the appropriateness of the given investment can only be determined by a personalized examination of the given investor, which this site does not undertake and is not suitable for. Before making individual investment decisions, get detailed information from several sources and, if necessary, consult with a personal investment advisor!
