Russia May Play Resource Weaponization Card... Concerns Over Sharp Rise in Aluminum Prices

The world's largest nickel producer, Russia's Norilsk
[Image source=Reuters Yonhap News]

There are warnings that if Russia, cornered by Western sanctions, retaliates by weaponizing its resource exports, international raw material prices could fluctuate wildly. This is expected to deal a significant blow to the global manufacturing market, including the automotive sector.

According to major foreign media on the 8th (local time), Citigroup forecasted that if Russia restricts exports of aluminum and palladium, raw material prices in the international market could surge sharply. Currently, Russia is the second-largest producer of aluminum worldwide, following China. Notably, 10% of all aluminum imported into the United States is of Russian origin.

Earlier, at the beginning of the Russia-Ukraine war, the U.S. considered export sanctions on aluminum but excluded it from the sanctions list because aluminum is a mineral used in everything from automobiles to smartphones. However, starting from the 10th, a 200% tariff was imposed on aluminum and its derivatives produced in Russia. Additionally, there are projections that the U.S. may ban exports of Russian nickel and palladium as part of its sanctions against Russia.

Experts predict that if Russia retaliates against U.S. sanctions by reducing mineral production, raw material prices will soar. Max Layton, head of commodity research at Citigroup, warned, "Russia raised international oil prices by cutting oil production in response to Western sanctions. If the conflict between Western countries and Russia continues, more raw materials will experience sharp price fluctuations."

If Russia weaponizes metal raw materials, the manufacturing industry is also expected to suffer considerable damage. Major foreign media have speculated that Russia may ban exports of platinum and palladium in retaliation against U.S. sanctions. Palladium is a metal used in manufacturing automotive catalytic converters, and Russia accounts for one-quarter of the world's production. Ed Sturk, research director at the World Platinum Investment Council, explained, "The automotive industry is facing difficulties in sourcing platinum to replace Russian supplies."

Some Western companies have begun seeking alternative resources to Russian materials to mitigate the impact of Russia's resource weaponization. As a result, prices for non-Russian aluminum and nickel have also risen.

Major foreign media explained, "In February, 41% of aluminum stockpiled in the London Metal Exchange's metal warehouses and 95% of copper stock were of Russian origin," adding, "The continued accumulation of stock indicates that consumers are avoiding Russian resources."

This content was produced with the assistance of AI translation services.