In April, China's primary aluminium imports continued to incur significant losses, with the total import volume through general trade being lower than 100,000 mt [SMM Analysis]

According to customs data, in April 2024, domestic primary aluminium imports decreased by 12.38% MoM to 218,500 mt, up 119% YoY; domestic primary aluminium exports in April were approximately 12,200 mt, up 197.86% YoY; net imports of domestic primary aluminium in April 2024 reached 206,300 mt, up 115.2% YoY.

From January to April 2024, the cumulative domestic import volume of primary aluminium was 939,900 mt, up 192% YoY. The cumulative domestic export volume of primary aluminium was 14,400 mt, up 10.41% YoY. The total net import volume of primary aluminium reached 925,500 mt, up 199.5% YoY.

Overall, in April 2024, import losses of SHFE aluminium spot persisted. Starting from mid-April, the import loss expanded significantly, reaching a peak of 3,122.2 yuan/mt. By the end of April, the loss had narrowed somewhat but still remained above 1,500 yuan/mt. In April, primary aluminium imports saw significant losses, with import volumes down 12.38%, export volumes up 926.81% MoM, and up 197.86% YoY. Although import volumes remained at a relatively high level of 218,500 mt, the total amount of primary aluminium imported through general trade has shown a noticeable decline, mainly due to long-term orders. The actual volume of imported primary aluminium entering the Chinese market has been relatively limited, reducing the impact on the domestic market.

Import Analysis:

From the perspective of import source countries, in April 2024, the primary aluminium imported into China mainly came from Russia, India, China, Indonesia, and Malaysia. Among them, the total import volume of primary aluminium from Russia was about 107,200 mt, accounting for 49.05% of total, remaining the main source of China's primary aluminium imports, up 20.63% YoY. However, due to the closure of the import window, the import volume decreased by 7.31% MoM. Considering the delivery of some long-term contracts, the import volume of primary aluminium from Russia still exceeded 100,000 mt. The total import volume of primary aluminium from China was 32,100 mt, accounting for 14.67%. This part of the imported primary aluminium mainly entered the domestic market through export processing (namely imports after being processed overseas), primarily consisting of Rusal metal. The total import volume of primary aluminium from India was about 25,100 mt, accounting for 11.49% of the total imports; from Indonesia, it was about 18,300 mt, accounting for 8.37%; and from Malaysia, it was 9,400 mt, accounting for 4.30%.
From the perspective of trade methods, although primary aluminium imports in China in April 2024 were still mainly through general trade, their proportion decreased from 56.67% in March to 44.22%, down 12.45 percentage points. This was mainly due to the continuous closure of the primary aluminium import window in April, leading to sustained significant losses in imports. As a result, some imported primary aluminium was stored in bonded areas and did not actually enter the domestic market for circulation. Consequently, the proportion of primary aluminium entering through bonded supervision locations and special customs supervision areas reached 37.52%. The remaining 14.67% entered through export processing, 1.12% through feeding processing trade, and 2.47% through tolling trade.

Export Analysis:

Due to the continued closure of the import window in April, some imported sources were re-exported, leading to a significant increase in primary aluminium exports in April. From the perspective of trade methods, in April 2024, domestic primary aluminium mainly flowed out through logistics goods in special customs supervision areas, accounting for 99.68%. From the perspective of export destination countries, in April 2024, 58.76% of the exported primary aluminium went to South Korea, 38.47% to Taiwan, and 2.46% to Nigeria.
SMM Brief Comment: In April, the import window remained closed, and import losses continued to be significant. The actual inflow of imported primary aluminium into the domestic market through general trade significantly dropped to only 96,600 mt. This is a notable decrease compared to the imports through general trade in January (180,000 mt), February (134,500 mt), and March (141,300 mt). The impact on the domestic market has also weakened, somehow reducing the supply pressure. In May, the losses on primary aluminium imports have narrowed, but as of now, each mt of imported primary aluminium still incurs a loss of over 1,000 yuan. It is expected that the actual import volume of primary aluminium into the domestic market through general trade in May will remain at a low level, with limited impact on the domestic market. Some bonded area sources may take the opportunity to engage in re-export trade. However, considering factors such as long-term contracts, SMM expects that primary aluminium will maintain a net import in 2024, with the average monthly net import volume remaining high. Attention will be focused on the impact of UK and US sanctions on Rusal and the trade flow of Russian aluminium.