The OFAC said on April 23 companies now have until October 23, instead of June 5, to wind-down contracts with Rusal. The London Metal Exchange has followed the same guidelines, including the updated stance on cashflow payable to Rusal, permitting the closure of sanction-affected contracts through omnibus accounts as opposed to ring-fenced accounts.

This news has taken some pressure off the aluminium industry, especially for slab products where there is extreme tightness of non-Russian material.

“It was getting tough for the slab industry. Rusal provides the huge majority of slab in its contracts and there is for sure a shortage of non-Rusal material,” a trader said.

Slab is used by the automotive, packaging, foil and airspace industries. The main consumers are Constellium, Novelis, Aludium and Elval. The main producers are Rusal, Alcoa, Trimet, Hydro and EGA. From next year, Alba will produce 250,000 tonnes of slabs after line 6 comes online.

Rusal sells around 450,000 tonnes of slab into Europe, making up the majority of European consumption, according to a market source.

The aluminium slab business is almost all tied up in long term contracts with Rusal – but if these were wound-down by June, as the original announcement stated, the market would find itself in an extreme shortage.

Before Monday’s announcement, premiums for slab climbed significantly, according to traders, and there was a state of panic among buyers.

Slab is mostly sold basis Metal Bulletin’s P1020 premium plus a product upcharge, which has increased by $10-50 per tonne following sanctions on Rusal.

“I had [spot] queries for customers that I had not done business with before demanding slab over the last week or two,” a producer said.

“Usually the requirements for slab are very specific – but the customers were so desperate they just said: ‘whatever you have, ship to us’,” he added.

The loosening of terms surrounding Rusal sanctions means suppliers have more time to find a solution with their consumers, market sources told Metal Bulletin.

“Now everyone has a little bit longer to find a solution, an extra four months, the slab consumers they feel relieved,” a second producer said.

“It was starting to affect the automotive industry with companies scrambling to get metal for May – now this is not the case,” he added.

“Before, people were demanding I come back with an offer within hours, and not really questioning the premium. Now they are a bit more relaxed – they do not mind if I take a few days to answer,” a second trader said.

For now, premiums in Europe have stabilized at current levels and halted the significant rise following the US Treasury’s initial sanction announcement on April 6.

Prior to the original sanctions being brought against Oleg Deripaska and his asssets, Metal Bulletin’s benchmark Rotterdam duty-unpaid premium was at $98-105 per tonne.

It moved up multiple times of the space of a week and is now at $150-165 per tonne – an increase of nearly 50% week on week.

“The original problems are still there but the timeline is now longer, this means people are not as panicky and the premiums are stabilizing,” a market source said.