“The formal review process is under way… But time is short, and if we did not introduce a resolution today we would have been overtaken by events since any resolution must be pending in committee for 10 days before it is subject to discharge to the full Senate. So today I am introducing such legislation,” Schumer said in a statement on January 4.
The move was prompted by an announcement by the Treasury Department’s Office of Foreign Assets Control (OFAC) on December 19 that it would remove sanctions in place against Rusal and parent company EN+ Group in 30 days after securing an agreement that will result in a significant restructuring of the companies and corporate governance changes.
While Schumer has yet to decide whether Congress should act to disapprove this agreement, the introduction of the document allows it to keep this option on the table and “to preserve the procedural option of moving to bring up such a resolution at the end of the review process, if necessary, for expedited review and a vote by the full Senate.”
This gives Congress until January 17 to act or the sanctions will automatically be removed on January 18, Wiley Rein LLP international trade counsel Lori Scheetz said.
Passing the resolution of disapproval would require just a simple majority approval in the US House and Senate.
But President Donald Trump’s ability to veto the resolution presents a difficult hurdle for Democrats seeking to keep sanctions in place. If Trump vetoes the resolution Congress can then override the veto, but that would require a two-thirds majority vote in both chambers of Congress.
“Recently, one of the few areas of bipartisan agreement has included sanctions issues. However, should there be a Presidential veto, it could be a tall task for Congress to keep these sanctions in place,” Wiley Rein National Security practice co-chair Dan Pickard said.
On top of the procedural hurdles, the disruptive impact that these sanctions have had on the US aluminium supply chain could make it difficult for Schumer to gather enough support from some senators, many whom represent states with a significant manufacturing presence, to pass the resolution or to override the President’s veto.
“I frankly suspect that [sanctions] will be lifted because even if it’s sort of a political turf war between Democrats and the White House, the bigger issue is that the Rusal pipeline is very important, both to the US aluminium supply chain as well as to the European supply chain,” INTL FC Stone analyst Edward Meir said.
“I think [sanctions] will be lifted. I don’t think Congress will stop them,” IHS Markit director of research, pricing and purchasing John Mothersole told Fastmarkets. “I don’t even know if [the US Senate] could get 50 votes… even getting a simple majority, I don’t see that many Republican senators peeling on that.”
Sanctions relief for Rusal has large been priced into the aluminium market, Mothersole said. “It’s one of the reasons why I think aluminium prices have been easing off over the past eight weeks now,” he added.
Indeed, the London Metal Exchange’s cash aluminium contract has remained below $1,900 per tonne since December 24 in the official session and prior to that was below $2,000 per tonne since October 23. The cash contract closed the session at $1,858 per tonne on January 7.
The introduction of sanctions against Rusal in April had also injected uncertainty into the US market and significant volatility for aluminium premiums.
Fastmarkets AMM assessed the P1020 Midwest aluminium premium at 18.75-19.25 cents per lb on January 4, where it has remained since December 18. The premium had hit a more than three-year high of 22-23 cents per lb on April 10.
Similarly the US 6063 extrusion billet upcharge was assessed by Fastmarkets at 13-14 cents per lb on Friday, down from an all-time high of 17-19 cents per lb on June 15.