Easy on the head: EU plans to ban imports of Russian aluminum
The European Union is considering a ban on aluminum imports from Russia. Restrictions may be included in the 16th package of anti-Russian sanctions. Against the background of the discussions, the "winged metal" has already jumped in price. Izvestia found out how the possible ban will affect Europe and the global market.
May be banned
According to Reuters, the European Commission (EC) will propose to the EU countries a draft package of sanctions, which will include a ban on imports of Russian aluminum. The restrictions are intended to be introduced in stages, the first ones are to come into effect in February, as part of the 16-pack of anti-Russian sanctions. Against the background of discussion of sanctions against metal from Russia, its price on the London Metal Exchange (LME) rose to $2600 per ton.
In December, the agency wrote that at least 10 EU countries - Poland, Denmark, Czech Republic, Ireland, Estonia, Latvia, Lithuania, Sweden, Finland and Romania - were in favor of expanding sanctions against Russia, including trade in metals such as aluminum.
The West has been thinking about a complete ban on aluminum from Russia for a long time, although Europe faced the consequences of its shortage as early as 2022. Due to the sharp rise in electricity prices, production of the highly energy-intensive "aircraft metal" fell by 20-30%.
They will not be able to compensate
The European Union's plans to impose bans on Russian aluminum imports, if implemented, could lead to market destabilization, the Kremlin warned. Experts also point out that such a decision would be extremely shortsighted. Things are not going well with Europe's own production.
- The problem is that the European Union's non-ferrous metallurgy is unlikely to be able to compensate for it with its own products because of high electricity tariffs, the impact of which even such major European players as Norsk Hydro and Trimet Aluminium are facing," says Leonid Khazanov, an independent industrial expert.
With decarbonization, which is the path Europe is following, the industry needs more and more of this metal. Aluminum is a key element of renewable energy sources, cars with electric motors, and solar panels. In other words, it is impossible to develop "green" projects without consuming aluminum in growing volumes, experts stress.
Aluminum production in Europe since 2020 is closed first because of covid, and then because of high electricity prices (more than 40% of the cost of aluminum is the cost of electricity). In 2023 alone, European companies cut aluminum and zinc production by 50%, analysts at Solid Broker note.
Dangerous consequences
The share of aluminum from Russia was about 30% of total EU imports, and it will be difficult to replace it quickly, which is why Europe did not dare to take such categorical measures in previous sanctions packages. Russia now accounts for about 8% of European aluminum imports. In general, last year the volume of aluminum imports by the European Union from Russia is estimated at 350 thousand tons. However, the loss of these volumes will not pass without a trace for the Europeans.
The ban on Russian imports may lead to a shortage of metal in Europe, which will again have a negative impact on European processors and consumers. A similar situation was observed in 2018, when anti-Russian sanctions caused aluminum prices to jump 35% (almost $2700 per ton) on the London Metal Exchange, points out Alexey Ravinsky, CEO of Zapusk Group.
A blow to the industry
In such a situation there will be an even greater blow to the European industry, which has not yet recovered from the consequences of the energy crisis, in Europe they already talk about the phenomenon of deindustrialization that has begun.
Energy prices in the EU are on average almost twice as high as in the US and China. This is a serious structural disadvantage in terms of competitiveness and productivity, point out analysts at the French research center Rexecode.
According to Eurostat, between July 2023 and July 2024, industrial output fell by 2.2% in the eurozone and 1.7% in the EU. The worst performers are Hungary (minus 6.4%), Germany (5.5%), Italy (3.3%) and France (2.3%).
High energy and operating costs put Europeans "at a disadvantage compared to exporters from Asia, who have access to Russian hydrocarbons at reduced prices," Ineos pointed out. The situation was also complicated by the tightening of monetary policy of the European Central Bank (ECB). According to the forecast of S&P Global, the trend of plant closures and mothballing will continue in 2025.
Fierce competition
Dmitry Semenov, Chairman of the Board of Directors of Transinvest, predicts that possible new sanctions against Russian suppliers will lead to a 25-30% shortage of aluminum in European countries and a 15-20% shortage on the global market.
In case of a ban on Russian supplies, European countries will have to look for new sources of aluminum, for example, in the Middle East (UAE, Bahrain). But this may tighten competition with other countries, such as the United States, causing additional price increases.
Analysts warned last year that in the case of a ban on Russian supplies there would be a shortage, and an "aluminum war" between Europe and the U.S. would break out over supplies from the Middle East. Metal prices would soar, and industry, primarily European industry, would suffer again. The most vulnerable to the consequences of the ban will be the aluminum-dependent auto industry, construction, and energy sector, which will face increased costs.
To compensate for the deficit, the EU will be forced to look for alternative sources of supply, for example, from Canada, India, China or the Middle East. However, the possibilities of key suppliers are limited, emphasizes Arthur Meinhard, head of analytical department for global markets of IC Fontvielle.
- For example, China, the main producers of aluminum, but the country has a policy limiting production at the level of 45 million tons until 2017, while China has either already reached this ceiling or will reach it in the near future. This means that domestic production growth should slow down, which could lead to a decrease in the amount of exported metal, supporting its imports and prices," the analyst explained.
Russia, according to him, in such a situation will continue to seek to increase its aluminum exports to Asia. Over the past two years, Russia has already significantly reoriented Russian aluminum supplies from the European Union to China amid the barrier duties and the refusal to buy metal from Russia by a number of key European processors.
