As of Wednesday May 9, total aluminium stocks on the LME have declined 108,600 tonnes, more than 7%, since the US Department of the Treasury’s Office of Foreign Assets and Control’s (OFAC) announced on April 23 that companies now have until October 23, instead of June 5, to wind down contracts with Rusal.

“The extension showed a loosening of the sanctions and it was made very clear – from OFAC and the LME – that old Russian units were fine, so people are no longer scared to handle them,” a trader said.

“Everyone is picking them up off the exchange because who knows how long it will be before new units arrive. So, grab the stock while you can,” he added.

There have been 11 straight days of aluminium deliveries out of LME-listed warehouses, with metal leaving Europe, the US and Asia.

Today, 21,100 tonnes was delivered out – taking on-warrant stock levels down to 863,950 tonnes from almost 1 million tonnes a month ago.

“From what I understand, the October delay has changed the color of the situation. Glencore is saying business as usual until then,” Geordie Wilkes, Sucden analyst, told Metal Bulletin.

“The US has mentioned that if [Oleg] Deripaska relinquishes control in Rusal they’ll reassess sanctions. To what effect those reassessments will impact the landscape is unknown,” he added.

Deripaska’s EN+ Group holds his 48% stake in Rusal, but the oligarch has agreed, in principle, to reduce his shareholding in EN+ Group to below 50%, which would effectively lower his stake in Rusal. Deipaska is yet to formalize the reduction, however.

The movements out of LME warehouses are a stark contrast to the original reaction to Rusal sanctions.

After the sanctions were first announced on April 6, there was a number of large deliveries on to the exchange in European locations after traders tried to dump their Russian metal.

Over 101,000 tonnes were delivered on April 12 – including the largest single aluminium delivery Rotterdam warehouses since 2014.

“The picture has changed. At first people were scared and did not want to hold their metal, had trouble financing it and put it back onto the LME,” a second trader said.

“Now all the metal that was delivered on is going to be snapped up because people want aluminium,” he added.

“The extension gave people a little bit of breathing space and there was some more relief so it is not unusual that people are getting hold of the metal again – premiums are still very high in the physical world,” a third trader said.

The Metal Bulletin Rotterdam duty-unpaid in-warehouse aluminium premium rocked over 20.5% following the Rusal announcement – and still sits at a three-year high of $150-160 per tonne.

Traders said they expect more stock to be delivered out of the exchange over the next few weeks while it still unknown when traders will be able to handle new Russian material.

“For now, there may be relaxed rules but the same problems are in place for new material and so people need to get hold of the stuff they are allowed to handle without any problems,” a fourth trader said.

“But we don’t want to get into a situation where the LME is lacking metal stock – then people will panic,” he added.

The recent deliveries out provided a slight boost to the LME three-month price. It dipped slightly following the loosening of Rusal sanctions with market panic calming down to the $2,200 per tonne level but is now trading back above $2,300 per tonne.

LME aluminium stock levels are already at a historic low; since the end of last year and throughout 2018 on-warrant stocks levels have been around the lowest since 2007.

In 2007, on-warrant stock levels fell to as low as 715,800 tonnes – a stark contrast to the 4,784,850 tonnes on-warrant in 2011.