Indian automobile industry will be impacted in terms of profitability in the near term due to rise in aluminium prices following U.S. sanctions against Russian producer Rusal, according to rating agency Icra.
Countries and companies from around the world have been lobbying the USA government to soften the sanctions against Rusal because it was increasing clear they were causing severe disruption to global commodity markets, not only for aluminium, alumina and bauxite.
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London aluminium prices rose by as much as 1.6 percent on Monday as a rally driven by supply concerns after the United States slapped sanctions on Russian producer United Company Rusal regained momentum.
The selloff in aluminium after the Treasury announcement spread through other commodity markets on optimism the United States is not likely to impose further sanctions on Russia's metals and energy companies. Oleg Deripaska's company RUSAL has suffered the most from the recent sanctions. In the case of RUSAL, absent other adverse information and consistent with the facts and circumstances of any petition for delisting, the path for the United States to provide sanctions relief is through divestment and relinquishment of control of RUSAL by Oleg Deripaska.
The U.S. official said the allies would also discuss developments with European partners France, Germany and Britain on updating a nuclear deal between Iran and six major powers.
In a statement, the U.S. Treasury Department said Americans have until October 23 to wind down their business with Rusal and that the United States was not trying to harm those who depend on the company.
In the long run, that exposure to all the commodities involved in aluminum production is a positive, Deutsche Bank analyst Chris Terry said in a Monday note hiking Alcoa's price target to 70 from 60, apparently just ahead of the Rusal news. The price of the metal had soared 31 percent to multi-year highs after Washington brought havoc to the market two weeks ago by cutting RUSAL from its markets.
Up until this date, it is allowed to use part of the funds from the accounts of Rusal itself, blocked after April 6, or companies, in which he has a share of 50% or more to finance operations on servicing and closing down the business.
Rusal declined to comment on the Treasury Department announcement.
Besides being close to the Kremlin, Deripaska was also once an associate of Trump's ex-campaign chairman Paul Manafort, a top target of U.S. Special Prosecutor Robert Mueller in his investigation of ties between Russian Federation and the Trump campaign.