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Aluminium prices rocketed to a record level following the UK and the US’s decision to ban the trade of Russian metals to “prevent the Kremlin funnelling more cash into its war machine”.

At one stage in early morning trading, aluminium was up more than 9% on the London Metal Exchange (LME), the biggest rise seen since trading started in 1987. 

Nickel prices also rose, at one stage gaining more than 8%. Both metal prices later fell back.

Hopes ban will tighten Russia’s purse for war financing

The UK and US took the decision at the weekend to put sanctions in place against Russia on new production of aluminium, copper and nickel. 

Britain’s Chancellor Jeremy Hunt said the ban would: “Prevent the Kremlin funnelling more cash into its war machine”.

Russia’s metal production accounts globally for some 5% of aluminium supplies, 6% of nickel and 4% of copper.

Aluminium is used widely in manufacturing, being used across the board for products including body work on cars and aeroplanes, cans, foils and TVs.

A prolonged rise in the cost of the metal could push up prices across the economy and potentially create problems over inflation, which could see a rise at a time when countries are already concerned about the need to curb inflation. 

Goldman Sachs analysts believe the ban will be unlikely to threaten supply.

In a note to clients, they said: “Russian producers can continue to sell metal to non U.K./US markets – in this respect there is no immediate tightening implication or trade flow dislocation to Western markets from current structure.”

The price of copper remained largely unaffected.