Alcoa Stock Gains as Aluminum Prices Rise After New Sanctions on Russian Metals

Shares of aluminum giant Alcoa (AA) surged over 3% Monday as aluminum prices rose after the U.S. and U.K. jointly announced new sanctions on Russian metals in an effort to curb a crucial revenue source for the Kremlin.

“The London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) will no longer trade new aluminium, copper and nickel produced by Russia,” the U.K. government said in a press release Friday.

In a Monday note, Goldman Sachs’ commodities research group wrote that these were different from sanctions in 2018 that targeted specific companies. Goldman added that a key provision of the rules stated “any Russian metal produced on or after [April 13] cannot be delivered (warranted) into Western metals exchanges (LME, CME).” 

The group recommended investors “stay long copper and aluminium,” arguing that while these government-imposed measures will not provide an “immediate supply-demand shock,” they are happening “in an environment where fundamentals for copper and aluminium are inflecting into a sustained tightening direction, after two benign years for fundamentals in 2022 and 2023.”

Goldman said it sees three major factors impacting a reflationary phase in industrial metals: a continuation of China’s demand for metals for solar and other “green” products, more restraint on China’s onshore metals supply, and a cyclical recovery in manufacturing in Western nations, increasing competition for metal.

Alcoa reports first-quarter results Wednesday. Shares finished 3.9% higher at $36.57 Monday and have gained close to 10% so far this year.

UPDATE—April 15, 2024: This article has been updated to reflect more recent share price information.