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China’s Imports of Scrap Aluminum Grow 59.4% in February
Mar 13,2012 13:57CST
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Source:SMM
SMM believes the SHFE/LME aluminum price ratio will likely fall further, and any increase in scrap aluminum imports in March will likely be quite limited.

SHANGHAI, Mar. 13 (SMM) -- According to China Customs, China imported 220,000 mt of scrap aluminum during February, up 59.4% MoM. Total imports during the first two months of 2012 were 350,000 mt, down 3.9% YoY.

China’s imports of scrap aluminum recovered rapidly during February given no holiday factor. Arrivals in February were mainly goods ordered by domestic importers in December 2011, since customs clearance of some goods lagged behind during the Chinese New Year holiday which fell in January 2012.

SMM sources report that the average SHFE/LME aluminum price ratio was 7.78 during December, leaving strong price advantage for overseas scrap aluminum. Meanwhile, Japanese customers increased stock build-ups, boosting export orders at domestic secondary aluminum enterprises in 1Q 2012. Thus these enterprises increased import volumes of scrap aluminum in order to fulfill processing trade orders. These two factors caused China’s scrap aluminum imports in February to grow rapidly.

The SHFE/LME aluminum price ratio has fallen below 7 recently, and overseas scrap aluminum lost price advantage, with overseas prices already RMB 300/mt higher than domestic scrap aluminum prices. Therefore, domestic cast aluminum alloy producers become less willing to import goods, but instead increase buying of domestic scrap aluminum.

In summary, SMM believes the SHFE/LME aluminum price ratio will likely fall further, and any increase in scrap aluminum imports in March will likely be quite limited.

 

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