New US and UK sanctions will increase supplies of Russian metal to China, just as previously Western restrictions have strengthened the position of the Russian Federation as the main supplier of energy resources to China, reported ag. Bloomberg.
According to the publication, Russian supplies of key raw materials to China will also “increase Shanghai's role as a platform for determining the prices of materials critical to the global economy”.
The London Metal Exchange (LME) ban on trading in Russian metals produced on or after April 13, 2024 is “likely to lead to an even greater increase in Chinese imports”. The Shanghai Futures Exchange also remains the only major commodity trading platform in the world to accept Russian supplies of aluminum, copper and nickel.
According to the Chinese financial company Guotai Junan Securities, the new sanctions “will help increase the export of Russian metal to countries outside the jurisdiction of the US and Great Britain, especially to China”. The extra supply will also boost exports of Chinese-made metals as more material piles up within its borders, the brokerage said. China has become the world's largest producer of refined copper and aluminum and a major player in the nickel market thanks to investments in Indonesia.
Chinese importers have taken advantage of Beijing's strategic alliance with Moscow to get discounts on key goods by paying in yuan in order to trade without the dollar. This contributed to China's desire to “displace the dollar from the position of world reserve currency”, notes the publication.
April 12 UK and US expanded sanctions against Russia in metals trade, suggesting the LME and Chicago Mercantile Exchange will no longer can replenish aluminum, copper and nickel stocks in their warehouses due to the supply of raw materials of Russian origin. A joint statement from London and Washington noted that the introduced restrictions do not apply to existing stocks of Russian metals in the warehouses of the two exchanges, which will still be able to carry out commercial operations. However, both sites will no longer be able to buy Russian copper, aluminum and nickel.
Last December, the United Kingdom completely banned imports of copper, aluminum and nickel of Russian origin. In the United States, a similar ban begins now, but does not apply to metals mined before April 13, 2024.