Stronger yuan lowers Jan exports of aluminium sheets, plates, strips

SHANGHAI, Mar 6 (SMM) – China’s exports of aluminium sheet, plates and strips dipped in January as a stronger yuan and a higher SHFE/LME aluminium price ratio narrowed the arbitrage window.

According to the data from China Customs released over the weekend, exports of aluminium sheet, plates and strips under 11 HS codes totalled 246,000 mt in January, down 1.8% from 250,000 mt in December, but up 20% from 205,000 mt in January 2018. Year-on-year growth in January was 0.9 percentage point less than December.

The yuan rebounded above 6.7 for much of January. For the same month, the ratio of the most active aluminium contract on the Shanghai Futures Exchange to the three-month aluminium on the London Metal Exchange averaged 7.22, compared to the reading of 7.14 in December. This reflected that SHFE aluminium outperformed its LME counterpart at the start of 2019.

The Lunar New Year break also impacted exports in January as most road transport suspended from January 25.

As the firm yuan and high SHFE/LME aluminium price ratio shrank profit margins on exports, some firms told SMM that they saw export orders decline. While orders for the first quarter held relatively stable, April and May might see fewer orders.

Export orders for cast rolled coils in aluminium shrank significantly since December, some firm told SMM. Growing aluminium supplies overseas likely accounted for the decline.