By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
The UK Government announced this morning (29th June) new sanctions hitting Putin’s inner circle, with a government spokesperson stating “As long as Putin continues his abhorrent assault on Ukraine, we will use sanctions to weaken the Russian war machine. Today’s sanctions show that nothing and no one is off the table, including Putin’s inner circle”.
New Sanctions Introduced
• Oligarch Vladimir Potanin, Russia’s second richest man and key supporter of the Kremlin, sanctioned
• Anna Tsivileva, Putin’s first cousin once removed and president of major Russian company, also sanctioned
• New measures ensure that oligarchs cannot use UK trusts services
LME 3M COPPER & NICKEL INTRADAY PRICE (1M)
The key person of interest in this new list is Vladimir Potanin, who is the President of MMC Norilsk Nickel PJSC, although as of yet it has not been confirmed if sanctions will stretch to the company, which is the world’s largest producer of palladium and nickel. Within the Government’s press release (here), it was stated that Potanin was “Russia’s second richest man and owner of major conglomerate Interros. Potanin continues to amass wealth as he supports Putin’s regime, acquiring Rosbank, and shares in Tinkoff Bank in the period since Russia’s invasion of Ukraine”.
What is the Significance for the Nickel & Copper Markets?
As it stands, there has been a knee jerk price reaction following the headline with nickel currently trading at $24,500/t (as of 12.39 GMT), from a close to $23,158/t on 28th June, a 6% intraday lift. We are cautious here however, of a sustained price rise, given that it is uncertain if these sanctions will have a spill over impact onto Norilsk Nickel itself (although under common practice it generally does). As it stands, there is no outright ban on nickel or copper exports out of Russia, although the UK has a 35% tariff on copper imports (while Canada and Australia have sanctions on Mr. Potanin).
Key Nickel Statistics
• Norilsk Nickel is the largest producer of nickel in the world, responsible for ~5% of refined nickel and ~15% of class I nickel.
• In 2021, Norilsk nickel produced 131,000t of nickel concentrate, 134,000t of unwrought nickel and 124,000t of nickel matte.
• The vast majority (over half) of Russian nickel exports go to Finland, followed by China and to a smaller degree the Netherlands.
% Reliance on Russian Material
Nickel Matte: 87% of EU imports, 3% of non-EU imports
Nickel Concentrate: 2.5% of EU imports, 0.3% of China imports
Nickel Unwrought: 20.5% of EU imports, 11% of non-EU imports, 6% of US imports, 7% ROW (ex-China, EU, non-EU, US) imports
Key Copper Statistics
• Russia is the 8th largest producer of copper in the world (with mine production at 800,000t and refined production at 1Mt), accounting for 4% of global output. Norilsk nickel produced an average of 404,000t of copper over the last five years.
• Russia exports 70% of copper cathode produced, with 50-60% going to China and a third going to Europe
% Reliance on Russian Material
Refined Copper: 10% of non-EU imports, 9% of Chinese imports, 9% of EU imports, 3% of ROW (ex-China, EU, non-EU, US) and 0.2% of US imports.
Copper concentrate: 1% of Chinese imports
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