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Aluminium prices continued to retrace recent gains on Tuesday after Washington gave US customers of United Company Rusal more time to comply with sanctions on the Russian producer.
The sanctions, announced on April 6, last week drove prices for the metal to their highest since mid-2011 on fears that the global market could face shortages.
But the US Treasury Department had on Monday gave Americans until October 23, instead of June 5, to wind down business with Rusal and said it would consider lifting the sanctions if Rusal's major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.
“The deadline extension will allow for a deal to be crafted for Rusal and allow for an orderly transition in the market,” consultancy Wood Mackenzie had said in a note late on Monday.
“We expect near-term correction and volatility in LME prices” and global premiums, it added.
The US aluminium premium on Comex was at a three-year high of 21.5 cents per pound ($474 a tonne) on Monday.
LME aluminium
Three-month aluminium on the London Metal Exchange was down 3.2 per cent at $2,222.50 a tonne by 0704 GMT. It touched a low of $2,213 a tonne, its lowest since April 12, and slid by 7.1 per cent on Monday in its biggest one-day drop in eight years.
SHFE aluminium
The most-traded June aluminium contract on the Shanghai Futures Exchange closed down 3.7 per cent at 14,385 yuan ($2,278.05) a tonne. It fell by as much as 4.8 per cent overnight, its biggest daily dip since March 15, 2011.
Nickel
London nickel, which hit a three-year high on April 19 on fears the sanctions might be extended, edged up 0.1 per cent after closing down 3.8 per cent on Monday. Shanghai nickel had closed down 1.2 per cent on Tuesday.
In December, as news reports emerged about potential new US sanctions against Russia, aluminium magnate Deripaska instructed advisers to draw up contingency plans, according to people close to the businessman and his firms.
The Philippines is planning to limit the amount of land that miners can develop at any one time to boost environmental rehabilitation, a move that miners say may cut output of nickel ore in last year's top supplier to China.
Chilean industrial conglomerate Empresas Copec SA had said on Monday it had reached an agreement with Peru's Minsur S.A. to buy a 40 per cent stake in a holding company that owns a Peruvian copper mine project for $168.5 million.
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