Novelis Inc., one of the world’s biggest buyers of aluminum, said it won’t accept Russian metal in potential new deals to supply its European factories next year, in a move that may set the tone for upcoming contract negotiations across the industry.
(Bloomberg) — Novelis Inc., one of the world’s biggest buyers of aluminum, said it won’t accept Russian metal in potential new deals to supply its European factories next year, in a move that may set the tone for upcoming contract negotiations across the industry.
Russia is a key producer of aluminum, nickel and copper, none of which have been sanctioned by Europe or the US. While some in the industry — particularly in Europe — have been trying to avoid Russian metal since the invasion of Ukraine, much of the global trade takes place through annual or multi-annual deals that were already in place when the war started.
Novelis, which is owned by India’s Hindalco Industries Ltd., is one of the biggest manufacturers of aluminum products. It issued a tender this week for 2023 supply to its European plants that specified no metal of Russian origin would be allowed as part of any deals, a spokesperson for Novelis confirmed in response to questions from Bloomberg.
Read: Metals World Agonizes Over War But Keeps Buying From Russia
The aluminum industry is currently gearing up for what’s known as “mating season,” when metal buyers and sellers negotiate contracts for the following year’s supply. Europe is the key buyer of Russian metal, and if others follow Novelis’s lead it could force Russian producers to find new buyers, resulting in a large-scale reorganization of current trading relationships.
The discussions will also take place against the backdrop of mounting pressure on European aluminum supply — soaring energy costs are squeezing margins in the hugely power-intensive industry, forcing smelters to reduce or even stop production and potentially increasing the region’s reliance on imports.
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