A Russian aluminum giant with experience of handling US sanctions just took a hammering.
United Co. Rusal International tumbled as much as 22% in Hong Kong as investors monitored the dramatic escalation in the West’s stand-off with Moscow over Ukraine. That’s the biggest fall since April 2018, when Rusal was hit by an earlier round of US sanctions in response to what the US Treasury then called Russia’s “malign activity around the globe”.
The Ukraine crisis adds to risks for the major aluminum producer amid fears that rising tensions or further conflict in Ukraine could disrupt trade flows or trigger fresh sanctions against Russian entities. The US administration said it will announce new sanctions Tuesday, although there’s no certainty what those might entail.
Rusal shares slumped to their lowest since September, as the ruble fell and oil advanced.
Russia’s exports of aluminum account come largely from Rusal and are equivalent to about 5% of global output. Sanctions on the company in 2018 upended the global market and led to soaring prices -- as well as complaints from manufacturers struggling to find metal.
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While the US and its allies have said Russia is preparing to attack its smaller neighbor, Moscow has repeatedly denied any such plans.
Aluminum surged Tuesday to its highest intra-day level in more than 13 years, and is near a record high. The metal was up 1.2% at $3 319 a ton by 11:50 a.m Shanghai time. Nickel, with Russia also a major producer, rose to its highest since 2011.
Rusal was among the largest companies the US has ever put on its sanctions list. The earlier curbs were removed in January 2019 after Rusal’s billionaire founder Oleg Deripaska agreed to relinquish control.