Shares of US aluminum company Alcoa posted on Monday their largest one-day loss in nine years after the Treasury Department extended the wind-down period for USA customers' transactions with sanctioned Russian rival Rusal by six months.
Last week, a German lobby for metal companies warned that sanctions against Russia's top aluminum producer are likely to hit European vehicle production since RUSAL owns an aluminum refinery in Ireland, which is crucial for the auto industry on the continent. In the case of RUSAL, absent other adverse information and consistent with the facts and circumstances of any petition for delisting, the path for the United States to provide sanctions relief is through divestment and relinquishment of control of RUSAL by Oleg Deripaska.
On Monday morning, the U.S. Treasury threw a potential lifeline by making clear it's not pushing for the company's collapse.
"The market is clearly taking this as light at the end of the tunnel for Rusal", said Oliver Nugent, a metals analyst at Dutch bank ING Groep NV.
Treasury gave Americans until October 23 instead of June 5 to wind down business with Rusal.
Representatives at Alcoa didn't immediately respond to phone calls and emails seeking comment.
Even so, Treasury said it would not revoke the sanctions on Rusal until Deripaska was no longer its owner "absent other adverse information".
The selloff in aluminium after the Treasury announcement spread through other commodity markets on optimism the USA isn't likely to impose further sanctions on Russia's metals and energy companies. French sources said initial feedback had been "constructive". Prices fell as much as 9.4 percent, the most ever. Rusal, easing supply concerns.
The US statement also adds pressure on Deripaska as he tries to save the company without surrendering control.
The stocks surged last week, especially Alcoa, as prices of alumina, a key ingredient in aluminum, hit a record and aluminum prices rose to a six-year high.
Workers at one of several Rusal-dominated towns have also anxious about their futures unless sanctions end.