Photo taken on Nov. 11 shows a cupronickel sculpture depicting a panorama view of the Forbidden City, made by renowned artist Li Xiangqun. The sculpture is currently being exhibited at the Palace Museum in Beijing. It will also be displayed at other museums in Shanghai and other countries once the Beijing exhibition closes. (Photo: Du Yang/China News Services)

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The Russia-Ukraine conflict has sent the prices of aluminum and nickel to decade highs, causing concern over tight supply chains amid a recovery from the COVID-19 pandemic as well as threats to power batteries for new-energy vehicles (NEVs), which require nickel as an integral raw material, according to analysts.

Europe may suffer the most if Western countries put sanctions on Russia's nickel production or trade, although this is unlikely to happen, because Europe is the biggest buyer of Russian nickel, Chen Ruirui, an analyst specializing in nickel at metal consultancy Antaike, told the Global Times on Sunday. 

On Friday, the benchmark price of nickel on the London Metal Exchange (LME) surged to around $25,000 per ton, the highest in nearly 10 years. 

Russia accounted for around 7 percent of global nickel output and 18 percent of China's nickel imports, according to Chen. But China's nickel imports from Russia were mainly in the form of nickel plates for stainless steel and alloy production, instead of NEV batteries, she added. 

The buoyant NEV market in China has brought hot demand for nickel, but "the nickel in Chinese NEV power batteries is mainly imported from Australia, Papua New Guinea, New Caledonia and Indonesia, so the Russia-Ukraine conflict will not cripple China's NEV supply chains," Chen said, while underscoring nickel's strategic significance globally. 

Meanwhile, prices of aluminum on the LME reached the highest since 2008, and there's likely to be a significant influence on global aluminum supply.

According to statistics from consultancy Mysteel, Russia produced 3.64 million tons of crude aluminum in 2021, or 5.4 percent of global crude aluminum output.

The US government has held off for now on sanctions against Russia that could disrupt global aluminum supplies, Bloomberg reported, citing people familiar with the matter, as the market is already seeing severe shortages of the metal and the US had learned the costs of such sanctions before.

Rusal, the biggest crude aluminum producer in Russia, was sanctioned by the US in 2018. The sanction resulted in severe supply tightness and rising global aluminum prices, and it finally hit the costs for downstream manufacturers.

However, as the Russia-Ukraine conflict escalates, the possibility of sanctions on Rusal is rising, bringing growing concerns of aluminum supply contractions on overseas markets, an analysis by Mysteel said.

The 2018 sanctions drove up China's aluminum exports at that time. "If the sanctions again appear in 2022, in tandem with the renewed demand from overseas markets from the pandemic, China's aluminum export orders are expected to rise," Mysteel said.