Aluminum Retreats From Seven-Year High Amid Bets on Rusal Aid

(Bloomberg) -- Aluminum posted the first loss in four days amid speculation that Russia could come to the aid of United Co. Rusal, easing supply concerns after U.S. sanctions on the producer had sent prices to an almost seven-year high.

Aluminum for three-month delivery fell 2 percent to settle at $2,485 a metric ton at 5:52 p.m. on the London Metal Exchange. The commodity earlier rallied as much as 7.1 percent, a record intraday gain, and touched the highest since May 2011. All other metals fell.

Commodities markets have been rocked for the past two weeks by the clampdown on Rusal, the largest aluminum supplier outside China, setting off a rush for alternative supplies and stirring concern that further U.S. action could affect other markets like nickel. The Associated Press reported Thursday that the Kremlin said a temporary nationalization of aluminum producer Rusal is being discussed as the government mulls how to support Rusal.

Aluminum is down because of “the talk of the government coming to aid Rusal, which shifts sentiment toward a resolution to the current situation,” said Geordie Wilkes, an analyst at Sucden Financial Ltd. “The government may feel they may need to do something due to the amount of workers Rusal employs and the impact on the economy.”

Rusal will find ways to keep shipping cargoes despite U.S. sanctions, said Randy Giveans, a shipping analyst at Jefferies LLC in Houston. While bigger European and U.S. owners will avoid working with Rusal, smaller operators -- particularly those in Asia and the Middle East -- could be tempted.

Nickel fell 1.3 percent to settle at $15,075 a ton in London. Earlier, the metal surged to a three-year high as traders speculated that other major mining companies could face the ire of U.S. officials.

--With assistance from Manisha Jha

To contact the reporter on this story: Susanne Barton in New York at swalker33@bloomberg.net.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Joe Richter, Steven Frank

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