The result of Scotland’s independence referendum could have a significant impact on the European aluminium market. As Hotline went to press voters were still at the polls – so we’ve provided two alternative takes depending on what the result is. Delete as appropriate.

IF THEY VOTED YES – Scotland becomes an independent country, severing ties with the rest of the UK and, by extension, losing its EU membership.

Rio Tinto Alcan’s Lochaber smelter in Scotland is now no longer within the EU and thus its product is subject to 6% import duties when entering Europe, on top of higher energy prices. “They could negotiate an aluminium-specific duty exemption, like Iceland or Norway,” a trader said. “So Scotland will be duty-unpaid or a mini Norway.”

Also the sterling loses further ground to the dollar. Dollar export markets open up for UK sellers, such as aluminium scrap dealers. Material flows into the US and the Far East, tightening scrap markets in the UK and Europe and raising prices. Several secondary aluminium smelters struggle to maintain viability.

IF THEY VOTED NO – Nothing doing. Forget everything. As you were.

Jethro Wookey
Twitter: @jethrowookey_mb