"The pullback on the immediate imposition of Rusal sanctions by the US Treasury gives the aluminium market much-needed breathing space," the aluminium team said.

The aluminium price has shot up since the US decision earlier this month to impose sanctions on Russian oligarchs, officials and entities in response to "malign activity" around the globe, as suppliers scrambled to meet demand. 

It fell more than 7.5% on the London Metal Exchange yesterday to close at US$2,297 per tonne, still higher than the $1,967/t it was fetching prior to the April 6 announcement of sanctions.

Yesterday Treasury secretary Steven Mnuchin extended the deadline until October 23 for Rusal's US customers to comply with sanctions and reportedly indicated the US would consider lifting the sanctions if Rusal's major shareholder Oleg Deripaska gave up control of the company.

"Rusal has felt the impact of US sanctions because of its entanglement with Oleg Deripaska, but the US government is not targeting the hardworking people who depend on Rusal and its subsidiaries," Mnuchin said.

"Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL's petition [for delisting]." 

Wood Mackenzie said the extension would allow for a deal to be crafted for Rusal and allow for an orderly transition in the market.

"We expect near-term correction and volatility in LME prices and global premia," analysts said.

"With the excitement over the Rusal sanctions now subsiding, it's back to business as usual.

"Section 232 trade tariffs and duties on Chinese imports will now come back to the centre of attention for the aluminium market."