Net imports of primary aluminum in September decreased both YoY and MoM. Net imports in Q4 are expected to decrease by 30% YoY [SMM Analysis]

Primary aluminum imports: According to data from the General Administration of Customs, China's primary aluminum imports in September 2024 were approximately 137,000 mt, down 16% MoM and down 31.7% YoY. From January to September, the total imports of primary aluminum were about 1.649 million mt, up 72.5% YoY.

Primary aluminum exports: According to data from the General Administration of Customs, China's primary aluminum exports in September 2024 were approximately 11,400 mt, down 23% MoM and up 62.7% YoY. From January to September, the total exports of primary aluminum were about 73,600 mt, down approximately 34.8% YoY.

Net imports of primary aluminum: In September 2024, China's net imports of primary aluminum were about 126,000 mt, down 15.3% MoM and down 35.2% YoY. From January to September, the total net imports of primary aluminum were about 1.576 million mt, up 86.9% YoY. (The above import and export data are based on HS codes 76011090, 76011010)

In August and September, the domestic import loss of primary aluminum was significant, and there were few arbitrage opportunities between domestic and foreign markets. Therefore, the market mainly relied on long-term contracts, resulting in a MoM decrease in primary aluminum imports in September.

Import analysis:

From the perspective of import sources:

In September 2024, the main sources of China's primary aluminum imports were still Russia, China, Indonesia, India, and other countries and regions. Among them, the total imports of primary aluminum from Russia in September were about 65,200 mt, down 3.9% MoM, accounting for 47.6% of the total domestic imports. From January to September, the total imports of primary aluminum from Russia were about 806,000 mt, flat YoY.

In addition, the imports of primary aluminum from China in September were about 30,800 mt, down 37.6% MoM. This part mainly consists of alumina exported from China to Russia, processed into aluminum ingots, and then re-imported into the Chinese market. From the perspective of the origin of aluminum ingots, Russian aluminum ingots still dominate. From January to September, the total imports of this form were 263,000 mt, accounting for 15.9% of the total domestic primary aluminum imports.

From other import sources, the primary aluminum imports from major import countries such as India and Indonesia showed a MoM decrease in September. Countries with increased import volumes mainly included Malaysia, the UAE, and Oman.

SMM Brief Comment: The net imports of domestic aluminum in September were basically in line with previous SMM expectations. With limited opportunities for opening the import window, domestic imports of primary aluminum mainly relied on long-term contracts from Russia and parts of Southeast Asia. The Q4 premium at Japanese ports was finally set at $175, and overseas spot aluminum maintained a high premium. Additionally, the aluminum smelter in Malaysia experienced a production cut of 100,000 mt due to an accident, keeping overseas aluminum in a tight state. It is expected that the aluminum price will continue the trend of LME outperforming SHFE. Domestic net imports of primary aluminum in Q4 are expected to be around 380,000 mt, down approximately 30.6% YoY. On the other hand, domestic production is expected to increase, with a decrease in production cuts in Yunnan in Q4. Domestic aluminum production is expected to grow by 3% YoY to around 11 million mt. The expected decrease in net imports in Q4 will undoubtedly reduce the pressure on the domestic supply side. With limited YoY growth in apparent supply and positive demand expectations, there is little expectation of a surplus from a supply-demand perspective in Q4.