Research & Insights #53

US and UK ban imports of Russian aluminium, copper and nickel

The United States and United Kingdom have each imposed a ban on imports of Russian aluminium, copper and nickel. As a result, the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) will no longer be able to accept these Russian-produced metals. According to Citigroup, Russia produces 6% of the world’s aluminium, 4% of its copper and 11% of its high-purity nickel metal. Metals are Russia’s leading export item after energy, with a value of US$ 15 billion in 2023. Titanium and platinum-group metals have been excluded from the ban, as Russia remains an indispensable global supplier of these two hard-to-find metals. China, India and Turkey are expected to consume all the Russian metal that the US, UK and other Western countries are blocking because of sanctions.

Russia increases its LNG production and deliveries to Europe

Russia’s liquefied natural gas (LNG) exports rose by over 4% in the first quarter of 2024. It has increased its LNG production to replace sanctioned pipeline gas exports to Europe, explains the Russian newspaper Kommersant. According to Kpler data, LNG exports in the first quarter of 2024 rose by 4.3% to 8.7 million metric tons. Exports to the European Union rose by 4%, while those to Asia fell by 7%. Most of Russia’s LNG production comes from the Yamal LNG project, managed by Novatek, and the Sakhalin Energy project, managed by Gazprom. The European Union has become the biggest buyer of Russian LNG, accounting for half of the total volume of Russian LNG exports since the beginning of the year. According to February data, China was the second largest buyer, absorbing 21% of Russian deliveries.

Moscow IPOs to be boosted by pension funds

In a draft ordinance, Russia’s Central Bank said it would allow non-government pension funds (NPFs) to buy shares in an initial public offering (IPO) if their aggregate value on the stock market is at least 3 billion rubles (US$ 32 million), up from 50 billion rubles (US$ 535 million) at present. IPOs could double this year to over 80 billion rubles (US$ 862 million), according to estimates by Aigenis, reported on Bloomberg. This figure is well below the US$ 3 billion reached in 2021 before the outbreak of conflict in Ukraine, but it is in line with the government’s desire to develop capital markets and support the economy. The Central Bank wants to encourage long-term savings to invest in the equity market in a context where foreign funds have disappeared. For small Russian companies, it is becoming attractive to raise capital by selling shares at a time when the key interest rate is 16%.

European courts rule in favour of two Russian billionaires

The two wealthy Russian bankers, Mikhail Fridman and Petr Aven, had their inclusion on the EU sanctions list annulled by the European Court of Justice (ECJ) last week. The highest judicial body in the EU has now ruled in their favour, stating that the European Council had not sufficiently demonstrated the relevance of the sanctions imposed on them. Both men are major shareholders in the Alfa Group conglomerate, which includes Russia’s leading private bank, Alfa Bank, and  largest food retailer, X5 Retail Group. They remain subject to an EU-wide travel ban and asset freeze, pending the outcome of a separate legal action. The judgment highlighted apparent flaws in the EU’s research and intelligence-gathering process when drawing up restrictions against more than 1,700 individuals and 400 entities since 2014 accused of supporting or enabling the invasion of Ukraine.

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