Aluminum is heading for its biggest winning streak since 1988 in the four days since the U.S. slapped sanctions on United Co. Rusal and as top exchanges said they’ll stop accepting metal from the Russian smelting giant.

The metal advanced 3 per cent on Wednesday to US$2,266.50 a metric by 11 a.m. on the London Metal Exchange. That’s up 13 per cent since Thursday, before the U.S. announced sanctions.

Both the LME and CME Group Inc.’s Comex have said they won’t allow new deliveries of metal from Russian billionaire Oleg Deripaska’s Rusal, the biggest aluminum producer outside of China.

“I think there’s definitely potential for prices to pass recent peaks,” Helen Lau, an analyst at Argonaut Securities Asia Ltd., said from Hong Kong. “Imagine how tight the world market is going to be if you lose a 10th of world supply, even for the short term. More and more companies are responding to the sanctions.”

After declining through most of this year, aluminum is heading back toward its peak of US$2,290.50 a ton reached last December, a more than five-year high.

While Rusal’s stock has been hammered in Hong Kong, the rally in aluminum prices has fueled gains in the shares of rivals worldwide. The block on Russian supplies adds to earlier import tariffs imposed by the U.S. to benefit American producers most.

Alcoa Corp., the largest U.S. producer, has climbed 14 per cent since the close last Thursday, before the sanctions announcement. Rusal shares have dropped more than 50 per cent this week.

The LME introduced a temporary suspension on placing Rusal metal on warrant with effect from April 17 unless the owner demonstrates it won’t breach sanctions, the bourse said. It set the date on the view that metal warranted before then would have been produced and supplied by Rusal prior to April 6, the day sanctions were announced. Rusal is evaluating the effect, it said in a statement.

Comex said it has revoked the approved status for warranting and delivery of the company’s brands against the futures contract.

Glencore Plc, the largest commodities trader, has said it won’t proceed with a plan to swap its 8.75 per cent stake in Rusal for shares in another of Deripaska’s companies, while Chief Executive Officer Ivan Glasenberg has resigned from Rusal’s board. Glencore, which has a multi-year deal to buy Rusal metal, says it’s evaluating other contracts with the group.

Russian aluminum seen ending up on world market ‘by some means’

Still, there’s no real way that aluminum from Rusal can be prevented from finding its way onto the global market eventually, according to Sanford C. Bernstein analysts. China or any other non-ally of the U.S. will likely buy shipments, and there are no means to effectively audit trade flows, they said.

In LME trading on Wednesday, other base metals mostly rose, with copper up 0.2 per cent, zinc up 0.3 per cent and nickel up 1 per cent.

--With assistance from Martin Ritchie