The metal jumped in price on Monday after lawyers and traders said that many non-US customers would also be wary of buying from the company because of the wide reach of the sanctions.
Shares of Rusal plunged as much as 41.8% today, its lowest since October 2016.
New U.S. sanctions are causing fresh economic pain for Moscow, but have also ensnarled a handful of Western firms with deep roots in Russian Federation.
The entrance to a Moscow business centre that houses the offices of the aluminium giant Rusal, one of the companies controlled by the Russian billionaire Oleg Deripaska.
The RTS index, which trades in dollars, fell 9.75 percent, and the MOEX index, which trades in roubles, fell 6.9 percent.
Moody's had held a "positive" outlook on Rusal's non-investment grade Ba3 rating.
Moody's said it was withdrawing all ratings for Rusal due to its own business reasons.
Rusal's aluminum brands are being excluded from the LME, the world's biggest market for industrial metals, and the U.S. Comex exchange owned by the CME.More news: Cosby back on trial for sexual assault in #MeToo world
Rusal is the biggest producer of aluminum outside of China.
Separately, Rusal warned that the sanctions impact "may result in technical defaults in relation to certain credit obligations of the group, and the company is now evaluating the impact (if any) of such technical defaults on the financial position of the group".
"There's a lot of panic and uncertainty".
Russia's Moex stock market fell 7.6%, hitting funds exposed to the country.
Deripaska, whose wealth Forbes magazine estimates at $6.7bn, meets Putin regularly and has said his own interests can not be separated from those of the Russian state.
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.
The sanctions have had knock-on impact on precious metal palladium, which has surged 6 percent this week on the back of concerns about supply from number one producer Russian Federation.