SMM Analysis of China’s Primary Aluminium Import and Export in Q1 and Forecast for Q2

SHANGHAI, Apr 21(SMM) - In the first quarter of 2022, aluminium smelters in China resumed production on a large scale while overseas smelters reduced production, allowing LME aluminium to outshine SHFE aluminium.

China imported 39,400 mt of primary aluminium in March, up 115% MoM and down55.1% YoY. Exports were 42,300 mt, up 60% MoM and 5571% YoY. China maintained a net export of 2,826 mt, down 64.8% MoM.  

Imports totalled 96,600 mt in Q1, down 71% YoY, while exports totalled 73,000 mt, up 3017% YoY. The net import was 23,400 mt, down 92.9% YoY.

In Q1, 44.8% of the primary aluminium was imported under general trade while another 38.7% was from cargoes under special customs supervision areas. Russia, India and Australia were the top three suppliers.  

Since the closure of primary aluminium import window at the end of last year, the SHFE/LME aluminium price ratio has hovered at a low level. Up to now, the aluminium ingot import loss is still close to 2,500 yuan/mt. The resumed aluminium capacity in China will continue to release output and the operating capacity is expected to reach 40.6 million mt at the end of the second quarter. Domestic aluminium supply will be close to level in the same period last year, and demand for imported aluminium ingots will fall sharply. Given geopolitical and energy problems, overseas smelters may reduce output further. Theoretically speaking, imports should fall considerably. However, cheaper aluminium ingots and Russia and other countries may flow into China.  

In terms of exports, high-purity aluminium took the lion’s share last year. However, 70,700 mt of ordinary aluminium ingots were exported in Q1 this year, most of which were cargoes in special customs supervision area, that is, imported goods at the bonded area, instead of domestically produced aluminium ingots.

Domestic aluminium output in Q2 may exceed level in the same period last year, but primary aluminium exports are expected to be limited due to restrictions by export tariffs. On the whole, domestic primary aluminium imports are expected to maintain a year-on-year decline in Q2, and there will not be a substantial increase in exports. However, considering the potential exports from Rusal, China may see a slight net import of primary aluminium. In light of overseas supply deficit, China's aluminium semis export prospects are still positive.