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Metals: USA, Great Britain, China and Russia

Britain and the United States have imposed a ban on the sale of Russian aluminium, copper and nickel on the London Metal Exchange (LME). This ban will cause a decline in demand and prices for Russian supplies. However, Russians will still be able to sell their metals to buyers outside of the US and UK who are not part of the LME. The LME is where the majority of global metals trade takes place. Furthermore, there are traders who seek to take advantage of legal loopholes to profit from the large aluminium stocks on the LME.

To avoid the effects of Western sanctions and taxes, Chinese companies and the Russian Copper Company (RCC) have resorted to trading new copper wire rods disguised as scrap. The wire rod, shredded in China’s isolated Xinjiang region, is difficult to distinguish from scrap. This allows Chinese and Russian exporters and importers to benefit from the differences in tariff rates applied to scrap and new metal.

US President Joe Biden has proposed a 25% increase in US tariffs on Chinese steel and aluminium products. This proposed higher tariff would apply to goods worth more than $1 billion. Currently, products of interest are subject to a 7.5% customs duty. Additionally, an investigation is being launched into Chinese trade practices in the shipbuilding, maritime, and logistics sectors, which may also lead to the introduction of higher tariffs.

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