Over the weekend, the Department of the Treasury withdrew sanctions against some Russian companies (RSX) (EEM) including RUSAL—the largest aluminum producer outside China. According to CNBC, “Earlier this month, 11 of Trump’s fellow Republicans in the U.S. Senate joined Democrats in a failed effort to keep the sanctions on Rusal, its parent, En+ Group, and power firm JSC EuroSibEnergo.”
Withdrawing the sanctions was a mere formality. Last year, RUSAL restructured its board in an apparent deal with the US (SPY). However, the sanctions and the subsequent flip-flops by the Trump Administration had a negative impact on aluminum markets last year. Aluminum prices rose to multiyear highs in April after President Trump announced sanctions on RUSAL. After the sanctions were extended, we saw a sell-off in aluminum prices.
Section 232 tariffs
Despite the RUSAL sanctions and the Section 232 tariffs, US aluminum producers including Alcoa (AA) and Century Aluminum (CENX) had a challenging run on stock markets last year. Downstream metal users like Ford (F), General Motors (GM), Boeing (BA), and General Electric (GE) have seen higher costs.
Regarding the RUSAL sanctions, China was the key beneficiary. China’s aluminum exports rose to record highs in 2018 as buyers shied away from RUSAL metal. Chinese steel exports have fallen gradually amid global pressure.
Read China’s Trade Surplus Surges Higher under Trump’s Watch for more analysis of China’s recent trade data.