Net imports of primary aluminum in October decreased by 27% YoY; import losses expanded in November, likely leading to a decline in import volumes [SMM Analysis]

SMM, November 26: Primary aluminum imports: According to data from the General Administration of Customs, China's primary aluminum imports in October 2024 were approximately 175,000 mt, up 27.5% MoM but down 19.3% YoY. From January to October, the cumulative import volume of primary aluminum was about 1.824 million mt, up 55.5% YoY.

Primary aluminum exports: According to data from the General Administration of Customs, China's primary aluminum exports in October 2024 were approximately 15,900 mt, up 38.9% MoM and up 2,495% YoY. From January to October, the cumulative export volume of primary aluminum was about 89,500 mt, down approximately 21.1% YoY.

Net imports of primary aluminum: In October 2024, China's net imports of primary aluminum were about 159,000 mt, up 26.5% MoM but down 26.5% YoY. From January to October, the cumulative net import volume of primary aluminum was about 1.734 million mt, up 63.7% YoY. (The above import and export data are based on HS codes 76011090 and 76011010)

Import analysis:
From the perspective of import origin: In October 2024, the main sources of China's primary aluminum imports were the Russian Federation, China, India, Indonesia, and other countries and regions. Among them, the total volume of primary aluminum imported from Russia in October was about 97,000 mt, up 48.5% MoM, accounting for 55.4% of the total imports in October. From January to October, the total volume of primary aluminum imported from Russia was about 903,000 mt, accounting for 49.5% of the total imports during this period.

Additionally, the volume of primary aluminum imported from China in October was about 57,000 mt, up 85.4% MoM. This portion mainly consists of aluminum ingots processed from alumina exported from China to Russia and then re-imported into the Chinese market. In terms of the origin of the aluminum ingots, they are still primarily Russian aluminum ingots. From January to October, the total volume of such imports was 320,000 mt, accounting for 17.5% of the total primary aluminum imports.

In October, the import of overseas primary aluminum was in a loss state, and the import losses were expanding. The primary aluminum imported from countries such as India and Indonesia showed a MoM decline, with much of the aluminum ingots in these regions being transshipped to other countries and regions at ports.

Trade mode: In terms of the trade mode of primary aluminum imports in October, the import losses expanded, and suppliers' willingness to clear customs and ship to the Chinese market decreased. Although the total import volume showed a MoM increase of 27.5%, the actual volume directly entering the Chinese market through Ordinary Trade was only 69,000 mt, down approximately 6.7% MoM. The volume exported through Entrepot Trade by Customs Special Control Area and processing trade modes showed significant MoM growth, with much of the processing trade being the volume mentioned earlier that was imported into China. This trade mode of primary aluminum imports has shown a monthly increase this year and may become the main import mode in the future. According to customs data, from January to October, the total volume of primary aluminum imported through processing trade was about 320,000 mt, accounting for approximately 17.5% of the total primary aluminum imports. The import volumes through processing trade and Ordinary Trade modes mainly reflect the actual consumption of overseas primary aluminum in China. In October, the total import volume through these two modes was about 126,000 mt, and from January to October, the total import volume was about 1.239 million mt, accounting for approximately 67.9% of the total imports.

SMM Brief Comment: In early October, the price spread between domestic and overseas markets narrowed, and import losses slightly recovered compared to the end of September. This might sustain the arrival of primary aluminum imports in November. However, since November, import losses have expanded, and with the announcement on November 15 that China will cancel the export tax rebate for aluminum semis starting December 1, the price spread between domestic and overseas markets has widened. The import losses of primary aluminum exceeded 2,000 yuan/mt, reducing the willingness of overseas suppliers to clear customs and ship to China. Some aluminum ingots at ports were transshipped to other countries and regions. Therefore, the subsequent net imports of primary aluminum in China may mainly consist of processing trade volumes, while Ordinary Trade is expected to decline due to the significant price inversion between domestic and overseas aluminum prices. SMM expects that the net imports of primary aluminum in November-December may show both YoY and MoM declines, with the annual net import volume likely around 2 million mt.