Commodity prices fall on softened Treasury message on Russia's Rusal

OLGA MALTSEVA  AFP  Getty Images

OLGA MALTSEVA AFP Getty Images

Prices of aluminum have soared by more than 30 percent since the U.S. sanctions announcement.

The United States will give Americans an extension until October 23 to wind down their business with Russia-based aluminum giant Rusal as the Treasury Department considers the company's petition, Treasury Secretary Steven Mnuchin said in a press release on Monday.

The U.S. Treasury said it would provide sanctions relief to Rusal if Oleg Deripaska relinquished control, according to statement.

An afternoon recap of the day's most important business news, delivered weekdays. The price of Rusal had fallen by nearly 70 percent after the announcement.

However, the US' largest producer of aluminium - Alcoa - dropped as prices fell on the suggestion supply would not be affected longer-term. Aluminum shot to multiyear highs as manufacturers raced to secure supply. A German industry lobbying group has warned, for example, that aluminum smelters may be forced to close, which would threaten automakers, aerospace and other industries as well as affecting non-Rusal aluminum producers.

"Rusal has approached us to petition for delisting", Mnuchin said.

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Countries and companies from around the world have been lobbying the USA government to soften the sanctions against Rusal because it was increasing clear they were causing severe disruption to global commodity markets, not only for aluminium, alumina and bauxite. It has risen almost a third since sanctions were imposed on Rusal on April 6.

As a result of these sanctions, Rusal is not permitted to sell material into the United States and its assets under USA jurisdiction are frozen. "Changing the ownership structure would be a solution".

Mr Carsten Menke Julius Baer analyst said that "The US can't afford to (impose sanctions on) Nornickel because they are so heavily reliant on palladium". The Kremlin and Deripaska did not immediately respond to the announcement. Deripaska's spokeswoman wasn't immediately available. "It looks as if there was a lot of pressure from the U.S. aluminum downstream industry".

Alumina prices have risen as much as 80 per cent since the sanctions were introduced.

But the USA clarified on Monday that it won't enforce sanctions for those doing business with Rusal while officials examine the impact. "It shows that Rusal is trying get off the list". Treasury also blocked USA persons and businesses from transactions with Rusal and EN+ Group, the industrial holding company owned by Deripaska that controls Rusal.

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