Russia's nickel production accounts for 5.6% of the world, accounting for 7.2% of the output outside China; Russia's electrolytic aluminum production accounts for 5.8% of the world, accounting for 13.5% of the output outside China; The output of copper concentrate in Russia accounts for 4.1% of the world and 4.4% of the output outside China. Russia is the largest primary aluminum producer abroad, with an electrolytic aluminum production capacity of 4 million tons. In 2021, the output of electrolytic aluminum was 3.76 million tons, accounting for 5.8% of the world's total, accounting for 13.5% of the output outside China.

In 2018, the United States imposed sanctions on Rusal, with targeted sanctions and severe sanctions. At present, the European and American sanctions against Russia triggered by the Russia-Ukraine conflict have not been directly targeted at Rusal. At present, Rusal's aluminum ingots are in normal trade circulation, and the procurement of raw materials has not been heard to be affected, so the business is far less affected than the sanctions in 2018. However, the recent increasing sanctions imposed by Europe and America on Russia may further affect the production and operation of Russian aluminum. On March 20th, Australia said it would stop exporting alumina and bauxite to Russia from now on. Russia announced that the company is currently evaluating the impact of the above incidents. We believe that the closure of Rusal's alumina plant in Ukraine and the disturbance of global alumina trade will push up the price of alumina abroad. As of March 18th, the FOB price of alumina in Western Australia has risen to USD 525/ton, and the price of alumina in Shandong is RMB 2,900/ton. Domestic alumina prices are upside down, and domestic alumina is ready to be exported, thus driving the domestic alumina prices to rise.

The second impact of the Russian-Ukrainian conflict on the nonferrous metal market-the global energy price rises, raising the cost of metal smelting.

Russia accounts for nearly 40% of Europe's natural gas supply. Even if Russia keeps supplying, Europe's natural gas inventory will reach the lowest value at the end of April. According to the data of the International Energy Agency, Russia is the third largest oil producer in the world. In December 2021, the export volume of Russian crude oil and petroleum products reached 7.8 million barrels per day. According to the forecast of relevant institutions, the global crude oil will maintain a tight balance between supply and demand in 2022-2023, with an average daily surplus of only 200,000 barrels in 2022 and 700,000 tons in 2023. Under the background of low inventory, the disturbance of the supply side will easily cause the price to fluctuate greatly.

The Russian-Ukrainian conflict has pushed up the global energy cost and raised the global non-ferrous metal smelting cost. The electricity price center in Europe has increased from 40 euros/MWh in the past to 200 euros/MWh at present. The zinc smelting capacity in Europe accounts for 16% of the world's total, and the aluminum smelting capacity accounts for 6% of the world's total. The rising energy price pushes up the global marginal production cost, which in turn raises the global commodity price. At present, the low inventory of non-ferrous metals in the world increases the price elasticity.