According to foreign news on January 28, after the U.S. lifts the sanctions on Russian aluminium, global aluminium consumers will pay less for the purchase of aluminium, but the U.S. import tariff on aluminium means that the U.S. consumers will benefit only a limited amount.

On Sunday, the Foreign Asset Management Office of the U.S. Treasury Department announced the lifting of sanctions on En+, Alcoa and JSC Euro Sibenergo, which reduced the direct and indirect ownership of Russian billionaire Oleg Deripaska and cut off his control over these companies, ensuring that most of the directors of En+, Alcoa and Alcoa will be independent directors, including Deripaska has no business, professional or family relationships with Americans or Europeans. At the same time, these companies agreed to provide unprecedented transparency to the U.S. Treasury through extensive and sustained auditing, certification and reporting requirements.

That sent the London Futures Exchange (LME) aluminium futures price down 2% to nearly $1880 a ton on Monday.

After the sanctions were imposed, aluminium prices fell 30% from a seven-year high of $2718 hit in April last year. Aluminum is widely used in transportation and packaging.

Julius Bear, an analyst at Carsten Menke, said: “Since the first sanctions were extended, the market has begun to think that sanctions will eventually be lifted.”

Earlier, the United States extended the deadline for dealing with Aluminum Russia several times.

Menke said, “The U.S. import tariff on aluminium means that American manufacturers will be more expensive than European manufacturers. But from a global supply point of view, as long as the export motive exists, U.S. tariffs do not matter.

Tariffs mean that producers need to sell aluminium to the United States driven by strong incentives, as can be seen from the high price of aluminium in the spot market compared with LME futures.

Aluminum shipments to the United States are about $0.19 per pound, or $420 per ton, double the $200 per pound in early 2008 and about 20 per cent higher than the tariff levels announced in early March last year.

By July 2020, the rise of aluminium in the United States had dropped to $350 per ton, which is the necessary price level to attract aluminium to the United States.

The United States is a major consumer of aluminium, consuming between 5 and 6 million tons of material this year, while global consumption is expected to be 68 million tons.

In 2017, Russian aluminium supply accounted for only about 10% of the U.S. market. Aluminum Canada, which accounts for half of the U.S. market, is the largest supplier of aluminium in the United States.

If, as some expected, tariffs were abolished, Canada was exempted or quotas were granted, the aluminium premium would fall sharply further.

In a report, Wood Mackenzie analysts said, “Any agreement with Canada will result in 2.5 million tons of raw aluminium entering the United States duty-free, and greatly dilute the proportion of aluminium imported by the United States from duty-paid countries.”

For European consumers, as traders in the region hold large quantities of aluminium stocks, the current $69/ton aluminium litre, which is down nearly 60% from the beginning of May last year, will fall further.

An aluminium sheet manufacturer said, “Aluminum that Russia cannot sell will begin to be shipped to Europe, and we may also see that a large amount of aluminium in Europe will flow into LME warehouses.”

After the United States officially announced the lifting of sanctions against Aluminum Russia, LME lifted the temporary ban on Aluminum Russia’s registered warehouses for storing metals on the exchange Monday, which came into effect immediately.