Primary Aluminium Imports: According to data from the General Administration of Customs, in July 2024, domestic primary aluminium imports were approximately 129,900 mt, up 7.2% MoM and 11.4% YoY. From January to July, the cumulative import volume of domestic primary aluminium was about 1.349 million mt, up 124% YoY.
Primary Aluminium Exports: According to data from the General Administration of Customs, in July 2024, domestic primary aluminium exports were approximately 19,000 mt, up 169.4% MoM but down 16.7% YoY. From January to July, the cumulative export volume of primary aluminium was about 47,200 mt, down approximately 41% YoY.
Net Imports of Primary Aluminium: In July 2024, domestic net imports of primary aluminium were approximately 111,000 mt, down 2.8% MoM but up 18.3% YoY. From January to July, the cumulative net import volume of domestic primary aluminium was about 1.302 million mt, up 149% YoY. (The above import and export data are based on customs codes 76011090, 76011010)
From the data, domestic primary aluminium imports in July showed a slight MoM increase, but net imports continued to decline MoM. With the import window for primary aluminium remaining closed, more overseas primary aluminium sought cost-reduction methods to enter the domestic market. Therefore, in terms of trade methods, the import volume of primary aluminium through general trade continued to decline in July, with the increase mainly coming from processing trade.
Import Analysis:
From the perspective of import source countries: In July 2024, the main import source countries for primary aluminium were Russia, China, Indonesia, India, and Malaysia. Among them, the total import volume from Russia was about 54,500 mt, accounting for 42% of the total imports in July. Russia is the main source country for China's primary aluminium imports. From January to July, the total import volume from Russia was about 673,000 mt, up 28.9% YoY, accounting for 49.9% of the total domestic imports, making it the top source country for primary aluminium imports. These aluminum ingots were mainly sent to Shanghai, Shandong, Henan, and Liaoning in China.
Additionally, in 2024, the import volume from China increased month by month. This part mainly involved China's alumina being exported to Russia, processed into aluminum ingots, and then re-imported into the Chinese market. In July, the import volume of this method increased to 46,000 mt, accounting for 35.6%. From January to July, the total import volume of this method was 183,000 mt, accounting for 13.5% of the total primary aluminium imports. This processing trade method can reduce export tariffs when exporting from Russia.
In July, the total import volume of primary aluminium from Indonesia was about 12,700 mt, accounting for 9.1%. From January to July, the total import volume from Indonesia was about 120,000 mt, accounting for 8.9% of the total imports. With the release of Indonesia's aluminium production in 2024, there is still an expectation of growth in the export of Indonesian aluminum ingots to China.
From the perspective of trade methods: With the import window remaining closed and the inability to achieve arbitrage between domestic and overseas spot prices, the import volume of domestic primary aluminium through general trade continued to decline. In July 2024, the main import volume of domestic primary aluminium through general trade was about 50,000 mt, down 7.3% MoM, accounting for 38.6%. From January to July, the total import volume of primary aluminium through general trade was about 714,000 mt, accounting for 52.97% of the total imports.
In July, the increase in primary aluminium entering the domestic market through processing trade was significant, with an import volume of about 46,000 mt, accounting for 35.6% of the total primary aluminium imports in July, up 77.8% MoM.
Export Analysis:
From the perspective of the price spread between domestic and overseas markets, it is difficult for domestic primary aluminium, especially A00 aluminium ingots, to have export profits. Therefore, there are few exports of domestic primary aluminium. The primary aluminium that appears in customs data is mainly exported through the trade model of logistics of goods in special customs supervision areas. These aluminum ingots are mostly overseas brands temporarily stored in domestic bonded areas and then shipped to other overseas locations. From January to July, the total export volume of primary aluminium through the logistics of goods in special customs supervision areas was about 44,500 mt, accounting for 94.3% of the total exports. These sources mainly flowed to South Korea, Mexico, Taiwan, and other countries and regions. The total export volume of primary aluminium through general trade was about 153 mt, accounting for 0.3% of the total primary aluminium exports. This part of the primary aluminium is mostly high-purity aluminium products with an aluminium content greater than 99.95%, mainly exported to Japan and South Korea.
SMM Comments: From the data and market situation, the total import volume of primary aluminium in 2024 showed a significant YoY increase, mainly due to the increase in long-term contracts from overseas. With the import window for primary aluminium remaining closed, long-term contracts will still enter the Chinese market as scheduled. In August, the domestic and overseas aluminium markets still maintained the pattern of LME outperforming SHFE. Although the price spread between domestic and overseas markets continued to narrow from late July, some import traders might use the narrowing price spread trend for import spot arbitrage, but the increase was limited. In late August, LME rebounded more strongly than the domestic market due to favourable macro front overseas, and the price spread between domestic and overseas markets widened again. With the price ratio being unstable, arbitrage between domestic and overseas markets was unstable. Therefore, the import of aluminum ingots in the market was still mainly based on long-term contracts. It is expected that the net import volume of domestic primary aluminium in August might slightly increase to around 130,000-140,000 mt. In the medium and long-term, the second phase of Indonesia's Huacheng is expected to be put into operation in the fourth quarter, and the production of primary aluminium in Indonesia will slowly increase, which will to some extent increase the expectation of Indonesian aluminum ingots being sent to the domestic market. Considering the proportion of long-term contracts and the expected increase in future import sources, SMM expects the total import volume of domestic primary aluminium in 2024 to approach 2 million mt, up 45% YoY.
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