Well, this isn’t great news in terms of removing uncertainty from Russian assets and I suppose it could portend more turbulence for the metals.
Last week, the torrid aluminum rally stalled and the ruble got some respite when it became clear that the Treasury might be willing to ease sanctions on Rusal if Oleg Deripaska gave up control of the company. Well on Thursday, we got these headlines:
- OLEG DERIPASKA IS SAID TO PLAN ON KEEPING CONTROL OF RUSAL
- DERIPASKA NOTE GOING QUIETLY
That’s got aluminum on the move again:
This comes a week after reports that the company was looking to China for help amid an increasingly desperate situation that found Rusal forced to rent storage space to stockpile unsold inventory.
According to Thursday’s reporting, Deripaska is now hoping that Europe will lobby the U.S. on the way to convincing the Trump administration to ease up. Here’s Bloomberg on the potential market implications:
The billionaire’s resistance to relinquishing control of Rusal sets up the prospect of a standoff between Rusal and the U.S., with the European aluminum industry warning there will be further chaos if the situation isn’t resolved before a wind down period expires.
Apparently, he’s feeling more confident about this situation following the softened stance from Treasury and the extended deadline re: how long companies can continue to trade with Rusal (it’s now October 23).
But markets were obviously looking for this to be resolved sooner rather than later – brinksmanship isn’t the most desirable outcome.
“It will really result in huge damage to Europe if this is not resolved,” Rob van Gils, chief executive officer of Hammerer Aluminium Industries GmbH, told Bloomberg, for the article linked above, adding that “it will probably result in more damage to Europe than it will to Mr. Putin.”
As a reminder, this has already cost Deripaska nearly $4 billion in personal wealth.
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