The shares of Rusal, the world’s biggest aluminum producer outside China, plunged 50 percent in the Hong Kongstock exchange following U.S. imposed sanctions on the firm and its billionaire owner Oleg Deripaska, Bloomberg reports. The development could have a devastating effect on the global aluminium market.
The company is reeling after the U.S. Treasury on Friday included Rusal and seven other Deripaska-linked firms in a list of 12 Russian companies hit with sanctions. The measures could hurt Rusal’s access to global financial markets and disrupt its relationship with suppliers and buyers. Prices of the metal,vital for the aircraft manufacturing and the auto industries, jumped as traders protected themselves against the chance Rusal will be prevented from supplying the global commodity market.
“This does warrant a little bit of panic buying by traders — the risk is large enough and real enough to buy on the back of insecurity of supply,” said Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd.
The sanctions may result in technical defaults on some credit obligations, Rusal said in a statement Monday that flagged a possible delay to its annual report for 2017.
The impact of sanctions “may be materially adverse to the business and prospects of the group,” Rusal said. “The company’s primary focus remains its business and, most importantly, all of its global customers, investors and partners. As a global business that engages with companies in different markets, the company will continue to ensure it abides by all applicable laws and regulations.”
Aluminum prices jumped as much as 4 percent to $2,124 a metric ton on the London Metal Exchange, extending a 1.6 percent gain in the previous session.
Russia’s Foreign Ministry is working on measures to respond to the latest U.S. sanctions, ministry spokeswoman Maria Zakharova said on state television channel Rossia 1, according to state news agency TASS.
“We have a whole list of possible measures that are being studied,” Zakharovawas quoted as saying.
