Shipments are only trickling out of the country and mostly towards Asia due to financing and banking issues, they said.
"We are still having problems - it's really hard to work even with this General License 14," a source at Rusal told Metal Bulletin.
Rusal declined to comment officially.
On April 23, the US Treasury eased restrictions on Russian producer Rusal and suggested it could lift sanctions if billionaire oligarch Oleg Deripaska reduced its shareholding.
The Office of Foreign Assets and Controls (OFAC) amended General Licence 14 to allow companies until October 23 - extended from June 5 - to wind down contracts with Rusal and proceed with US dollar payments
"The October deadline is not a relief at all - it so strange that many interpret it as a relief," a source close to Rusal said.
"What happens next? The aluminium curtain?" he added, in reference to the Iron Curtain that divided Europe into two separate areas from 1945 until the end of the Cold War in 1991, effectively blocking the Soviet Union from open contact with the West.
Despite the extended deadline, many banks continue to refuse to finance Russian aluminium while other parties, including some trading houses and consumers, prefer to stay away to avoid breaking any rules, sources explained.
Any transaction with Rusal or its commercial partners generally takes much longer to get approval, with sanction lawyers having to get involved.
So the vast majority of Rusal's aluminium produced after April 6, when US sanctions were first announced, cannot be exported - stocks are piling up in ports and production sites.
"The situation hasn't changed at St Petersburg. Nothing, P1020 included, is moving out and a lot of stuff is being held in fields in Siberia," one aluminium trader said.
Rusal, one of the world's largest aluminium producers - it accounts for 7% of global aluminium production - uses St Petersburg for most of its exports towards the West.
Stocks have been building up at the port of St Petersburg. Source: RS Metrics
Very small quantities of aluminium are being shipped to the East via rail from Rusal's smelters in Siberia and the Far Eastern ports of Vladivostok and Nakhodka, the source at Rusal said.
In Japan, leading end user UACJ recently announced that it had suspended trading with Rusal, mostly due to Japanese banks' reluctance to finance Russian material, but traders in Japan and buyers in South Korea, Malaysia and Taiwan are accepting Rusal metal, Metal Bulletin understands.
The sharp drop in Rusal shipments is mostly affecting value-added products (VAPs), with premiums for billet, slab and foundry alloys up sharply from pre-sanction levels. Rusal is still exporting from Kubal in Sweden, Metal Bulletin understands.
"The VAPs were expected to fall off a cliff for Q3 before picking back up in Q4 but, with nothing coming out of Russia, producers are starting to pump up the numbers," the first trader said.
"It’s a mixed tale - the billet market is in complete turmoil. The banks are still not playing ball," another trader said. "There is uncertainty… there are consumers and traders that can’t touch Rusal stuff because of financing issues."
Metal Bulletin assessed aluminium billet premiums
at $530-570 per tonne delivered in Germany with 30-day payment terms on May 4, down from a three-year peak of $560-600 in April. The next assessment is due on May 18.
For the primary foundry alloy market, on May 11 Metal Bulletin raised its silicon 7 wheel alloy premium to 15-17 cents per lb in the Midwest from 12-14 cents and kept the Germany premium at multi-year highs of $400-450 per tonne delivered with 30-day payment terms.
Justin Yang contributed to this article.