FOCUS: What will the Russian metals export duty mean for European aluminium premiums?

A Russian export tax on aluminium and other base metals levied to curb inflationary risk in the country has stirred expectations of further increases in an already bullish physical market.

The Russian government approved temporary export duties Friday on 340 steel and non-ferrous metals sold outside the Eurasian Economic Union (EAEU), which are set to take effect from August 1 through December 31.
A significant amount of aluminium from Russia usually serves the European market.
Russian aluminium producer Rusal's first quarter of 2021 results showed that 42% of total aluminium sales were to European destinations. Asia had 26% of sales and the United States 8%.
"This could be crazy for premiums and we expect things to rocket. The story for aluminium premiums was already bullish with tightness and freight issues and now there is this added on," a trader said. 

Some market participants expected any duty to be bullish for European aluminium premiums in Europe, where high freight rates have disincentivized metal to flow to the region leading to a shortage of supply while demand stays healthy. Spreads...

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