A complete US ban on Russian aluminum threatens to upend a global market already reeling from multiple disruptions, throwing a spotlight on how China could fill any supply gap.

The Biden administration is considering options including sanctions on Russia’s top producer of the metal as the White House looks to punish Moscow for its military escalations in Ukraine, according to people familiar with the deliberations. The measures would add to a tumultuous year of price swings, supply shifts and demand turmoil in the wake of Russia’s February invasion.

“In a scenario of sanctions against Russian aluminum, the western aluminum market would be exposed to extreme tightening,” Goldman Sachs Group Inc. wrote in an emailed note. Prices would rise much higher and China would export more semi-processed aluminum, the bank’s analysts including Nicholas Snowdon wrote.

Sanctions on United Co. Rusal International PJSC would be the most consequential of the options under consideration, which also include a a US import ban, or punitive tariffs on Russian supplies. Russia is the world’s second-biggest supplier of aluminum after China.

Aluminum prices surged to a record in March in the immediate aftermath of Russia’s attack, but have receded as Russian metal has largely kept flowing to global markets. Europe’s energy crisis has also pummeled demand and shuttered smelters there, while the London Metal Exchange has separately opened discussions about banning new Russian metal from its warehouses.

Worst Scenario

“The worst scenario is Europe and the US will block Russian aluminum,” Shanghai-based Chaos Ternary Research Institute wrote in an emailed note. “Stranded Russian aluminum will most likely flow to China, India and elsewhere, followed by China’s exports of aluminum products into Europe and the US to fill the gap.”

China is by far both the world’s biggest producer and consumer of aluminum. Under a reconfiguration of trade flows, metal from Russia could potentially be used by its domestic industries, with China then boosting overseas sales of its own metal along its well-established export routes.

There is precedent for the curbs on Rusal. In 2018, the US placed sanctions on the firm as relations with Russia soured, triggering so much turmoil in the market that the measures were rolled back in early 2019. At the time, there was also much speculation about whether Russian aluminum could flow to China, and Rusal’s billionaire founder Oleg Deripaska even visited Beijing to discuss cooperation.

“Eventually, China will ship in discounted primary aluminum from Russia then export out aluminum products to the west,” Wei Lai, an analyst with TF Futures, said by phone from Shanghai. China’s aluminum exports have already hit record levels in May this year, amid a domestic slowdown in demand.

Aluminum fell 1% to $2,282 a ton on the LME on Thursday, after posting one of its biggest spikes on record following the report about the White House’s discussions. Rusal’s shares in Hong Kong dropped as much as 8.1%.