USA extends deadline for Rusal sanctions, aluminum prices dive

Europe pushes back against US sanctions on Russia

Europe pushes back against US sanctions on Russia

Rusal had provided 7 percent of the world's alumina, the raw material for aluminum production.

"The path for the United States to provide sanctions relief is through divestment and relinquishment of control of RUSAL by Oleg Deripaska", Treasury said in a Monday update to the sanctions on the company.

With the threat of secondary sanctions on non-US parties being removed, more market participants are expected to be able to use Rusal metal, which was shunned when the US Treasury sanctioned the company.

Washington's clarification follows two weeks of chaos in global metal markets, during which manufacturers scrambled to secure supply. A German lobbying group said European plants may be forced to close and carmakers could face supply shortages. Treasury also blocked USA persons and businesses from transactions with Rusal and EN+ Group, the industrial holding company owned by Deripaska that controls Rusal. "Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL's petition".

"If there were previously doubts if Rusal will remain sanctioned if Deripaska sells out, now we have a clear answer", Oleg Petropavlovskiy, an analyst at BCS Global Markets, said by phone.

To recap, on April 6, the US Treasury imposed fresh sanctions on 26 Russian tycoons and officials, including Oleg Deripaska, Igor Rotenberg, Kirill Shamalov, Viktor Vekselberg, Suleyman Kerimov, Vladimir Bogdanov and Andrey Skoch.

Rusal declined to comment.

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. The Russians were seeking "clarification" on United States sanctions, Mnuchin said to reporters Saturday, without elaborating.

At Russia's request, Mnuchin met with Russian Finance Minister Siluanov during International Monetary Fund meetings in Washington last week. "It shows that Rusal is trying get off the list".

"Things have ground to a halt in terms of Rusal's dealings with major western companies", said Maximilian Hess, a senior political risk analyst at AKE International. "It looks as if there was a lot of pressure from the USA aluminium downstream industry". The most-actively traded palladium futures in NY dropped 5.4%. According to Morgan Stanley, it supplied almost 10% of USA aluminum imports a year ago, according to Morgan Stanley, as reported by Reuters.

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