Tackling tighter sanctions

Pictured: The aluminium factory in Shelekhov, Irkutsk Oblast, Siberia, Russia, whose output is increasingly unlikely to be exported to the west, because of Russia’s invasion of Ukraine. Image: UC Rusal Photo Gallery
Russian metal import bans have compacted the aluminium market, but sanctions are expected to grow. By Liz Newmark, Heba Hashem and Naubet Bisenov
The global metal packaging industry is assessing the potential impact on aluminium supplies of US, European Union (EU) and British sanctions against imports of Russian aluminium, which continue to be tightened as Moscow intensifies its invasion of Ukraine.
These sanctions are more serious for Russia and its metal producers than they look, writes Russian economist, Yevgeny Kogan, on his Telegram channel. The US Treasury and the British government banned the London Metal Exchange (LME) and Chicago Mercantile Exchange (CME), from accepting new Russian production of aluminium on 13 April 2024. Should these sanctions continue to tighten, they could lead to Russia’s aluminium producer, Rusal, losing the bulk of exports to the Western markets and turn into a loss-making enterprise.
Facing massive losses due to the sanctions, imposed because of Russia’s two-year-old invasion, causing 10,582 civilian deaths by February 2024 according to UN figures, Rusal has already called on the Russian government to offer subsidies and buy up its products to state reserves.
With aluminium markets being global, metal packaging buyers are watching implementation. Following the recent UK and US move, aluminium prices increased by more than 9%. The picture currently mirrors the situation with Russian oil, where exports to India and China at cut prices have partially replaced their imports from elsewhere.
Alessio Chiesa, an economist at the London-based Wood & Co consultancy, said that the metal sanctions’ impact depends on the ferocity of their implementation: “There have been reports on the blocking of Russian metals in the London Metal Exchange’s warehouses but I think this just means the material would move to Shanghai or elsewhere rather than impacting global prices,” Chiesa told CanTech International.
China is a major metal producer, including aluminium, but its output of metals is largely consumed domestically. Should China, like India with Russian oil, start replacing its own aluminium with Russian one domestically, then it could supply its own output to the global markets and, as a result, prevent shortages of the supply and price increases.
For packaging companies, “this will simplify things,” Chiesa believes, but Russian producers will have to accept price cuts, affecting their profitability.
However, for buyers, supplies could really tighten if sanctioning countries start to impose effective secondary sanctions on countries and companies that help Russian producers circumvent sanctions. Since there are no efficient mechanisms of tracing the origin of high value-added metal products, the risk of secondary sanctions could be high, and may force, for example, Chinese packagers to abandon Russian imports of aluminium and other metals, Kogan believes.
Nornickel, a major producer of copper and nickel, has announced that it would move its production to China to avoid sanctions. These pressures could worsen if the EU imposed a full and total ban of Russian metal imports, despite news reports warning that losing Russian metal would leave Europe with a shortfall of around 500,000 tonnes.
The EU has discussed banning most Russian aluminium, but it is not clear if its 14th sanctions package due soon, according to analysts talking to CanTech International (although no date has been set stressed Commission officials), will include full import bans. At present, the EU bans imports of Russian-made aluminium bars, rods and profiles; aluminium wire; aluminium plates, sheets and strip, of a thickness exceeding 0.2mm; aluminium foil of 0.2mm thickness or less; aluminium tubes and pipes. While this sounds impressive, an April question from European Parliament centre-right MEPs claimed these products entailed “a marginal share of Russian aluminium exports to the EU.”
Indeed, “We never confirm the contents or timing of upcoming packages,” a European Commission spokesperson told CanTech International on 10 May. “All decisions on sanctions are taken unanimously by member states in the Council. We do not comment on Council discussions or speculate on possible future developments.”
For now, unwrought (primary) lead and certain aluminium goods are excluded from EU sanctions, New York, US-based law firm Cleary Gottlieb noted in a 22 April 2024 report. Given the EU imports a significant amount of aluminium, nickel and copper from Russia, switching to imports from different countries could be “challenging and costly,” said the law firm.

Russia has imported plenty of scrap metal into Ukraine, through destroyed tanks in its invasion – above: the spoils of war near Kiev. Image: Kyiv City State Administration,
Oleksii Samsonov
But aluminium industry association, European Aluminium (EA), is prepared for an EU ban. Senior manager communications, Kelly Roegies, told CanTech International: “We have no specifics on the impact on can makers when it comes to a possible ban of Russian metal,” adding the EA “urges the Commission to include all major Russian aluminium categories in the 14th sanctions package.”
“There is no good reason not to include every major aluminium product category – ingots, slabs, billets,” EA director general, Paul Voss, added. “These categories represent over 85% of the EU’s aluminium imports from Russia.”
Citing data prepared February 2024 based on EU statistical office Eurostat, the EA noted that: “The industry is already decoupling from Russian metal, importing 34.9% less unwrought Russian aluminium in 2023 than in 2022 (512,122 tonnes compared to 786,921 tonnes).” This reduction has resulted in Russia’s market share now accounting for only about 8% of the EU’s aluminium ingot imports (HS 7601), down from 25% just a few years ago. The Russian share of non-EU imports also decreased from 12% in 2022 to 8.1% in 2023, said Eurostat.
“Without sanctions on these products, Europe is effectively bankrolling Russia’s war machine with billions of euros,” said Voss. The EA analysis reveals EU imports provided EUR€2.2 billion’s worth of revenue in 2022, falling to €1.2 billion in 2023. Eurostat data also shows EU imports of iron and steel have decreased sharply from 2022 to 2023, from 816.54 to 597.22 million tonnes, a drop in value from €5.6 billion to €2.9 billion.
Steel sanctions are tighter, with European Steel Association Eurofer head of communications, Lucia Sali, telling CanTech International that “imports into the EU of Russian steel finished products are already banned under the EU sanctions regime. In particular, as regards cans, Russian tin mill (the finished steel product out of which you make cans) imports have been forbidden since September 2022.”
Eurofer also “strongly supports the EU sanctions regime targeting Russian steel imports and reiterates the need to close loopholes, in particular as regards semi-finished steel products such as slabs, whose imports are currently still allowed (with exemptions extended until 2028).”
The Association of European Producers of Steel for Packaging (Apeal) secretary general, Steve Claus, called on the EU and member states to work harder on boosting EU metal supplies, as sanctions tighten: “Ensuring EU steel for packaging remains competitive on global export markets will enable this material to fulfil its role in helping achieve the European Green Deal aims and provide Europe with competitive technology and sustainable products,” he told CanTech International.
“One concrete example is the chromium-free passivation alternative,” for making tinplate in a less polluting way, he said. “The protective layer stabilises the tin oxide in a similar way to traditional chromium passivation, preventing further surface oxidation and maintaining product performance and using an environmentally sustainable manufacturing process.
“Apeal is advocating for the swift adoption of chromium-free solutions by supply chain partners before the conclusion of the authorisation period at the end of 2027, facilitating a seamless transition away from chromium VI compounds.” In the US, the impact of American sanctions on US metal packaging production will be limited because the industry already did not import much metal from Russia, a US Can Manufacturers Institute (CMI) spokesperson said.
While Russia had been a major supplier of aluminium to the US in past years, shipments have seen heavy declines even before Russia invaded Ukraine in February 2022. From 208,755 metric tonnes in 2022, US annual aluminium imports from Russia dropped to about 8,160 metric tonnes in 2023, and about 26 tonnes in the first four months of 2024, according to US Department of Commerce data.

Russia’s can makers may enjoy cheaper access to metal
supplies, as export markets are increasingly choked off because of the country’s invasion of Ukraine. Above: Russian gunpowder – exported by war, but not trade. Image: Andshel
US import of nickel products from Russia has also been on a downward path since early last decade. By 2023, total nickel metal shipments from Russia totalled only about 900 metric tonnes, according to an analysis from energy and commodities information provider, S&P Global Commodity Insights.
“Russia accounts for less than 1% of total US aluminium imports today, so the direct impact on US aluminium supply should be minimal. Many US aluminium companies have diversified away from Russian imports since sanctions were placed on this metal in [April] 2018 [lifted in December that year],” said Katie Rosebrook, manager for external affairs at America’s The Aluminum Association.
However, given the interconnected nature of global production networks, the ban could lead to supply chain interruptions, she admitted: “The determination to limit the acceptance of new Russian aluminium on global exchanges could have an impact on the trade of aluminium as a global commodity,” said Rosebrook.
Because LME and CME are the two largest metal exchanges in the world, there are likely to be repercussions that US metal purchasers will need to plan for. “The decreased worldwide availability of these essential resources might result in increased pricing and possible supply shortages for American consumers and businesses that depend on aluminium, copper, and nickel. As a result, American metal purchasers are encouraged to diversify their supply chain to brace themselves for potential continued volatility,” Chicago-based metal-market intelligence provider, MetalMiner, wrote in a post.
Unless China blinks in the face of potential secondary sanctions and stops buying discounted Russian primary aluminium to use domestically and export its aluminium products into Europe and the US, the potential for Chinese competition to seize market share is real, according to London-based economic analysis provider, ING Think.
Such concerns have already prompted a coalition of American canned food producers and steel can makers to file requests with the Biden administration on 12 April 2024, asking for protections against subsidised and unfairly priced imports from China – and for higher duties on China-made products.
“The China Canned Food Industry Association trumpeted the 19% increase in exports of canned foods to the US in 2023 of approximately 700 million cans. These imports are no doubt at least partially responsible for US food can production reaching the lowest level ever recorded by industry sources,” the coalition said.
Whether this will prompt Washington to take further action against Russian aluminium remains to be seen.
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