By Leslie Hook Financial TimesThe price of aluminum and nickel rose significantly on Thursday.The reason for this was the announcement by the London Metal Exchange (LME) that it intended to ban new deliveries of Russian metals.The LME wants to examine whether metals should be added to the already sanctioned raw materials oil and coal.This triggered fears of supply bottlenecks among retailers.According to LME boss Matthew Chamberlain, the metal exchange is currently considering whether to publish a discussion paper on how to deal with Russian metals.According to market participants aware of the plans, the paper bans new Russian metal from entering the market.While the UK and Europe have imposed sanctions on Russian oil and coal, no equivalent action has been taken on metals.Outside of China, Russia accounts for about 20 percent of world nickel production and 13 percent of aluminum production.If the LME were to restrict trade in Russian metals, it would deviate significantly from its previous position of allowing free trade in these metals.Traders fear that Russian producers will now sell their metal on the exchange.Aluminum prices rose 8 percent on the news before retreating to close 2.6 percent higher than at the open.Nickel, copper and zinc prices also rose on Thursday.Chamberlain confirmed that the group was considering publishing a discussion paper."The aim is to gather the market's assessment of further acceptance of Russian metal throughout the physical market."Publishing a paper would be the first step in imposing restrictions.A decision has not yet been made, Chamberlain said."Without Russian commodities being traded on the LME, there will be significant bottlenecks in the market," said Marcus Garvey, Macquarie's head of commodities strategy."But that's a big 'if'."In March, a squeeze in the LME nickel market -- partly due to traders' fears that Russian nickel production would collapse following the invasion of Ukraine -- led to the temporary shutdown of the nickel market and the liquidation of thousands of transactions.The supply of metals such as aluminum and nickel could become tighter if the LME imposes restrictions.Because it could become more difficult for banks to finance sanctioned commodities.In addition, analysts believe traders may want to close fewer deals with metal from Russia.According to Max Layton, a commodities analyst at Citi, the market had previously assumed that Russian metal would continue to be traded on the LME."Today we saw that a potential ban on entry has been priced in," he said.However, demand for base metals could fall next year if there is a severe recession in Europe or a global downturn, Layton said."In that case, there will likely be a Russian oversupply."© The Financial Times Limited [2022].All rights reserved.FT and Financial Times are trademarks of Financial Times Limited.The content may not be redistributed, copied or modified in any way.Börsenmedien AG is solely responsible for providing this translation.The Financial Times Limited accepts no responsibility for the accuracy or quality of the translation.Authors: Shiller, Robert J. Number of pages: 480 Date of publication: 03/16/2020 Format: Hardcover ISBN: 978-3-86470-666-0