U.S. economic sanctions on Russia have begun affecting international trade in aluminum and other nonferrous metals. This is because a major Russian aluminum company which accounts for a little less than 10% of the global production has become subject to the additional sanctions. It could have further repercussions on international trade, so relevant companies should immediately take measures, such as ensuring a substitute supplier.

The U.S. Department of the Treasury on April 6 announced additional sanctions banning Russian corporate and government officials from doing business with American companies, saying Moscow interfered with the 2016 presidential election via cyberattacks. Among those subject to the additional sanctions were Oleg Deripaska, a rising capitalist who has close ties with the Russian government of President Vladimir Putin, and major aluminum producer Rusal led by Deripaska.

Treasury Secretary Steven Mnuchin explained why he decided to impose the new sanctions, claiming that the targeted individuals and entities “have reaped enormous wealth from the corrupt Russian system.” It’s hard to say the additional sanctions are a protectionist measure unlike the additional tariffs on steel and aluminum imports from Japan, China, and other countries. But we need to note the fact that the U.S. additional sanctions on Russia are significantly affecting international trade in aluminum and other products.

The London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) Group of the U.S. suspended the trading of Rusal’s aluminum. That prompted many market players to believe that they will not be able to trade products made by Rusal, one of the largest aluminum producers in the world excluding China, fueling concerns for tight supplies in the international market.

The benchmark LME aluminum price last week temporarily shot up more than 30% from that marked before the additional sanctions were announced and hit the highest in about seven years.

Rusal is also a major shareholder in the world’s second-largest nickel producer Norilsk. Therefore, the market prices of nickel and of palladium, a precious metal primarily produced in Russia and used as a catalyst for processing automobile exhaust gases, are rising.

Japan is totally dependent on imports for the supply of virgin aluminum ingot, of which roughly 15% comes from Russia. It is hoped that trading houses and other relevant companies will find new suppliers in order to stably ensure necessary amount.

The additional sanctions are also pushing down Russian stock prices and the ruble’s exchange rate. Caution is required against the ripple effects the sanctions might have on the financial market.