The conflict between Russia and Ukraine will have a certain impact on the upstream of the cable industry

Us and European sanctions against Russia may further push up aluminum prices

As the world's major aluminum exporter, the dispute between Russia and Ukraine has once again cast a worrying shadow on the global aluminum supply. Traders are worried that if the United States and Europe increase sanctions against Russia, it will affect the supply of aluminum and further push up the price of aluminum.

In 2018, the aluminum producer of Russia and the international aluminum producer once accounted for about 6% of the global aluminum production. Now, the risk is approaching again. The stock price of Rusal trading in Hong Kong, China once plunged 22% on the 22nd, the largest one-day decline since it faced sanctions in April 2018.

Although it rebounded in subsequent transactions, international investors are still worried that the supply risk of aluminum may be further exacerbated by geopolitical tensions, especially under the current situation of tight supply due to the increase in demand for aluminum products. Once the conflict escalates, in addition to the direct impact on the supply from Russia, the rise in energy prices caused by the conflict between Russia and Ukraine will also push up the production cost of aluminum, This will help raise the price of aluminum products.

The impact of rising energy costs on copper, zinc and nickel can not be ignored

According to ICSG statistics, in 2020, Russia's refined copper output and export volume were 1.04 million tons and 740000 tons respectively, accounting for 4.2% and 8.9% of the world respectively. It is the fifth largest copper producer and the third largest exporter in the world; However, in 2021, Russian exports fell sharply by 40% to 463000 tons, mainly due to the Russian government's decision to impose export tariffs on ferrous and non-ferrous metals from August 1 to the end of the year. Industry insiders believe that the impact of Russia and Ukraine will not have a great impact on Russia's own copper production and export. The current low inventory situation in the copper market and the demand for imported copper in Europe and the United States do not support the sanctions imposed by Europe and the United States on Russian copper enterprises.

The impact of the conflict between Russia and Ukraine on the copper market mainly comes from two aspects: one is that the rise of energy costs has hit the enthusiasm of local copper enterprises in Europe, and the other is that the increase of inflationary pressure has boosted the demand for copper preservation. Considering that Russia's copper consumption is small and has been sanctioned for a long time, the market risk aversion is difficult to continue to rise, and the copper price will return to its own fundamentals; At present, domestic real estate relaxation signals are frequent, and the acceleration of infrastructure investment is expected. The peak construction season in spring is expected. Overseas spot prices continue to be tight, and copper prices are easy to rise but difficult to fall.

The output of zinc ingots in Russia is small. The impact of the conflict between Russia and Ukraine on zinc prices mainly lies in the increase of energy costs in Europe. In October last year, European refineries cut production due to the sharp rise in natural gas prices. On October 13, 2021, nyrstar announced that its three zinc smelters in Europe with a total annual zinc ingot capacity of nearly 700000 tons would reduce production by 50%. The news of the reduction pushed Shanghai zinc to 27715 yuan / ton.

According to statistics, the current smelting capacity in Europe is about 2.4 million tons. With the escalation of the conflict between Russia and Ukraine, Beixi No. 2 natural gas pipeline project is sanctioned and cannot be put into use. Under the high energy cost in Europe, the production loss of European zinc smelters may continue to suppress the output of zinc ingots in Europe. At present, LME spot premium has begun to rise gradually with the intensification of the conflict, and overseas spot is tightening. The logic of zinc ingot production reduction driven by the early European energy crisis may reappear, and then superimposed with the domestic spring peak season, the zinc price is expected to stop falling soon. The conflict between Russia and Ukraine will also have a noticeable impact on the supply of nickel. Russia is rich in nickel resources, accounting for 11.2% of the world's nickel output, and about 40% of Russia's nickel exports to Europe. In 2021, China's imports of refined nickel from Russia accounted for 20% of the total imports.

Russia Ukraine conflict and European and American sanctions against Russia may hinder the way of Russian nickel export to Europe, causing the rise of Lun nickel; However, at the same time, the number of Russian nickel imports to China may increase, resulting in a situation of strength at home and abroad.