Aluminium prices fell on Monday after the United States lifted sanctions on the world’s second-largest aluminium producer, United Company Rusal.

The United States announced in December its intention to lift the sanctions on Rusal and other Russian companies linked to oligarch Oleg Deripaska.

Benchmark aluminium on the London Metal Exchange surged to a seven-year high on fears of a supply squeeze after sanctions were imposed in April, but they ended the year down 18.6 per cent mainly because of the US-China trade war.

Aluminium ended 2.7 per cent down at $US1,867 a tonne on Monday, having hit its lowest in nearly a week and erased the previous session’s gains to its highest since December 24.

‘This doesn’t have the equivalent shock factor as the initial decision … this was largely priced in to the market,’ said Macquarie analyst Vivienne Lloyd, referring to the lifting of sanctions.

Meanwhile, the LME lifted its suspension on placing Rusal metal on warrant after blocking the metal in April.

BMO Capital Markets analyst Colin Hamilton said there was potential for aluminium stocks that were previously held off-exchange now becoming visible to the market, which could cause some near-term pressure on prices.

‘However, we remain of the view that, with the market in heavy deficit and demand set to improve, the skew of price risk into mid-year is to the upside,’ he said in a note.

Inventories of aluminium stand at 1.3 million tonnes in warehouses approved by the LME, near their lowest since May 2018.

There is likely to be little price support from top aluminium consumer China in the near term, with the country shutting down for the week-long Lunar New Year break next month.

Anticipated restarts to alumina production, including at Norsk Hydro’s Alunorte plant in Brazil, could keep pressure on prices, analysts have said.

The Rusal sanctions helped to boost Chinese exports of aluminium in 2018 by 20.9 per cent as producers plugged the supply gap left by Rusal.

The removal of the sanctions will mean aluminium users around the world will pay less for their material, but US tariffs on imports of the metal mean limited gains for the country’s consumers.

In the latest in the Sino-US trade dispute, Chinese Vice Premier Liu will visit the United States on Thursday and Friday for the next round of trade negotiations with Washington.

In other metals, copper closed 0.9 per cent down at $US6,002 a tonne while zinc was up 0.3 per cent at $US2,680 after touching a three-month high.

Lead slumped 1.5 per cent to $US2,078, having touched its highest since early September, while tin closed with a 0.2 per cent decline at $US20,650 and nickel hit its highest in nearly three months before ending 1.2 per cent down at $11,825.