MELBOURNE (Reuters) – Prices of alumina, the raw material for making aluminum, have surged after Rio Tinto said it could not fulfil supply contracts because of U.S. sanctions on United Company Rusal, adding to a crunch rippling through the aluminum supply chain. Rio said it was in the process of declaring force majeure on Friday for certain customer contracts that likely include alumina shipments from a refinery it operates with Rusal in Australia, bauxite shipments to a Rusal alumina refinery in Ireland, as well as alumina from that refinery to smelters in Europe. Force majeure is a legal term describing situations when a contract cannot be fulfilled because of forces beyond a company’s control. Alumina is a compound extracted from bauxite ore that is then smelted to form aluminum. COMEX alumina futures for delivery in May jumped 15 percent on Friday following the Rio curtailment. The futures are up 22 percent since April 6 when the United States imposed the sanctions on Rusal as part of broader sanctions against Russian companies and owners in response to allegations of Russian government interference in the 2016 U.S. presidential election. Prices for spot physical cargoes of alumina from Australia are $550 per ton,… continue reading
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