LONDON, May 24 -- China, the world's largest aluminum producer and user, in April exported more of the metal than it imported for the first time since the end of 2008 as supply outpaced demand.
Outbound shipments rose to 48,546 metric tons, exceeding imports of 28,987 tons, according to data from the Beijing-based Customs General Administration. Foreign shipments totaled 2,212 tons in March and 118 tons in April 2009.
China's aluminum production capacity will expand 20 percent this year, Neil Buxton, managing director at London-based researcher GFMS Metals Consulting, said May 21. Stockpiles monitored by the Shanghai Futures Exchange have climbed almost 65 percent this year to a record 489,495 tons.
"Consumption in China is also strong, but not enough to absorb the growth in domestic production," Buxton said.
Output of aluminum, used in industries from aerospace to packaging, will exceed consumption by 1.5 million tons this year, according to a Royal Bank of Scotland Group Plc forecast. That would be a fourth consecutive year of oversupply.
Chinese exports of the metal will probably remain elevated even after some output cuts linked to higher local power prices, Buxton said. Rising physical premiums in Europe, Japan and the U.S. gave Chinese exporters an incentive to sell more metal overseas, he said.
European premiums paid for aluminum jumped to $105 a ton in Rotterdam, the highest in at least a decade, according to London-based researcher CRU. In the U.S. Midwest, the premium advanced to the highest since 2005. The premiums are added to the price of metal for immediate delivery on the London Metal Exchange.
"We believe that the domestic market currently remains in an oversupplied situation," Kevin Norrish and Gayle Berry, analysts at Barclays Capital in London, said in a May 21 report. Production expansion may slow because of rising costs and tighter environmental legislation, they said.