Aluminum still rapidly cheapening after US Treasury’s statement on Rusal

Aluminum still rapidly cheapening after US Treasury’s statement on Rusal
Oleg Deripaska

After the US Treasury announced an extended deadline for terminating contracts with Rusal – until autumn, and lifting of sanctions from it, aluminum continues to fall in price on the London Metal Exchange (LME) for five consecutive trading sessions.

As of 9:30 Moscow time, the cost of three-month aluminum futures on LME has dropped by 0.6%, to $2213 per ton. Since April 20, metal has declined in price by 13% already.

Earlier, the US Treasury has announced its readiness to remove sanctions from Rusal, if Oleg Deripaska abdicates. This possibility was mentioned in the explanatory note of the Office of Foreign Assets Control (OFAC), posted on US Treasury’s website. Thus, the US authorities have sent a message that sanctions can be mitigated in case Deripaska sells his assets and completely refuses from controlling the company.

In addition, the Treasury has extended the timeframe within which other foreign companies are to terminate cooperation with the Russian aluminum producer, until October 23 of the current year.

Up to this day, it is allowed to use part of the funds from the accounts of Rusal itself or companies with his share of 50% or more that were blocked after April 6, to bankroll operations on servicing and shutter down the business.

To recap, on April 6, the US Treasury introduced new sanctions against 26 Russian oligarchs and officials, including Oleg Deripaska, Igor Rotenberg, Kirill Shamalov, Viktor Vekselberg, Suleyman Kerimov, Vladimir Bogdanov and Andrei Skoch. Besides, the list featured 12 companies controlled by the businessmen on the list.

Following this, Oleg Deripaska's shares on the Hong Kong Stock Exchange have plummeted by roughly 40%; given a sharp drop by more than 30%, the Moscow Stock Exchange has introduced a special procedure for trading in Rusal securities. The London Stock Exchange announced the suspension of trading in depositary receipts for shares of En+.

Rusal was even compelled to declare a risk of technical default, and Deripaska himself has lost over $1.3 billion.

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