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The US sanctions against Russian oligarchs and their companies have thrown the aluminium market into a frenzy. Even before the sanctions were announced, smelters were scraping the bottom of the silos for alumina. The Albras smelter in Brazil became the first casualty of the current alumina squeeze. With no clear timeline for the restart of Alunorte and the loss of output from Aughinish, market participants are now questioning which smelter will be the next to curtail output?

The past month has seen commodity prices come under strong downside pressure. The uncertainty that is hanging over these markets follows the announcement of US import tariffs and a stronger dollar. These have taken their toll on the complex as a whole, while copper has endured further weakness as exchange stocks and production continue to rise. Strong manufacturing activity in the US, Europe and China drove global demand growth of 2.1% in 2017. Industrial activity still looks broadly supportive for another few years of healthy demand expansion however risks to our outlook are emerging. The mine to trader market has been generally quiet during March. Concerns over copper concentrate supply disruptions appear to be easing, with new labour contracts now agreed in some high profile negotiations. Chinese smelters returned to the market later in the month, after a quiet start, and with fewer maintenance closures, bidding for material was reported to be in the low to mid-70s.

Lead joined the other base metals in a general price slide, yet managed to be the best performer despite losing 2.2% of value. Two large deliveries either side of the month start added 23kt to LME stocks, helping to deflate the lead price. Markets recovered as trade war tensions eased and lead's dynamics were helped by fresh warrant cancellations effectively neutralising the earlier influx and pushing the available tonnage down to a five-year low. Price spreads remained tight, the refined lead spot market saw little activity and scrap prices scarcely eased in the transition towards the low season. Lead concentrate supply is improving as Chinese mines reopen after winter, although environmental constraints may limit net growth this year. ROW mine production is forecast to increase but will be insufficient to allow full operation at smelters. Spot TCs are thus unchanged and annual contract negotiations look set to continue yielding terms lower than last year.

The Leninogorsk zinc smelter in Kazakhstan uses roast, leach, electrowin technology to produce slab zinc. Leach residue is treated by Waelz kiln, and since 2006 oxide ore from the Shaimerden ore body has also been processed through these. the current capacity of the smelter is 120kt/a slab zinc and there are no plans to increase this.