SHANGHAI, Dec. 15 (SMM) -- According to China Customs, China imported 280,000 mt of scrap aluminum during November, up 27.3% MoM. The rising SHFE/LME aluminum price ratio highlighted the price advantage of imported scrap aluminum, and domestic enterprises preferred to purchase imported scrap aluminum, contributing to significant growth of scrap aluminum imports in November.
China’s imports of scrap aluminum have fallen significantly since the beginning of 2011 due to the unfavorable SHFE/LME aluminum price ratio and weak consumption. Although imports in November soared, data shows that China’s total imports of scrap aluminum from January to November were 2.41 million mt, down 7.2% YoY.
According to SMM sources, import volumes of scrap aluminum kept growing since the start of 3Q due to gradually recovering secondary aluminum consumption and climbing SHFE/LME aluminum price ratio. shipments arriving in October were mostly of goods ordered in August and September when the average SHFE/LME aluminum price ratio was 7.44, up 0.18 compared with the average 7.26 from late August to early September, highlighting the price advantage of imported scrap aluminum. In addition, since aluminum prices have been on a downward track since 3Q, scrap aluminum recyclers showed little interest in recycling domestic scrap aluminum, resulting in tight supply of domestic scrap aluminum. In response, enterprises increased purchases of imported scrap aluminum in order to ensure supply of raw materials in the future.
In addition, secondary aluminum enterprises built raw material inventories ahead of the Chinese New Year holiday, also further bolstering scrap aluminum import volumes in November. As the SHFE/LME aluminum price ratio remains high currently, SMM predicts imports of scrap aluminum will remain high in December, but some enterprises have exhausted their import quotas at year’s end, which will restrict the growth of scrap aluminum import volumes in December.