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Meh

Britain and America have teamed up to block the trade of Russian metals to “prevent the Kremlin funnelling more cash into its war machine”.

The London Metal Exchange and the Chicago Mercantile Exchanges will no longer trade new aluminium, copper and nickel produced by Russia, in an effort to hinder one of the country’s biggest sources of revenue.

Delivery of new metal into warehouse is rarely a thing. Might, maybe, use futures to fix the price but that doesn’t necessarily use physical delivery into warehouse.

A marginal issue at best.

2 thoughts on “Meh”

  1. You disappoint me Tim. I understand that Australia’s aluminium exports are being hamstrung by our noble jihad to stop using all those foul fossil fuels to generate the power.

    But evidently that beast Putin is wickedly unwilling to cut his throat the way we do.

  2. The real issue for the exchanges is that sanctions and the threat of further sanctions, etc., have bifurcated the metals markets, but that exchange delivery procedures treat all metal the same. Shorts deliver the cheapest metal. If Russian metal trades at a discount in the cash market, that’s what will be delivered against futures, and the LME and CME contracts will become de facto Russian metal contracts. Which the exchanges don’t want.

    As yo suggest in your last sentence, few contracts are settled by delivery. But they are priced by the threat of delivery, and by the cheapest-to-deliver. You can’t cleave pricing from delivery even if delivery is rare.

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