China's Aluminium Imports Reach Annual High, Breaches 2009 Record

Reuters

23 Dec 2020, 07:30 PM IST

China is the world's biggest producer of the metal

China's aluminium imports reached a record annual high with a month to spare, customs data showed on Wednesday, after November inflows took this year's arbitrage-fuelled shipments above the previous peak set in 2009. Imports of unwrought aluminium and aluminium products into China, the world's biggest producer of the metal, came in at 188,973 tonnes last month, the General Administration of Customs said. That was down 26.4 per cent from October but up 158.6 per cent year on year, according to Reuters calculations.

It took imports for the January-November period to 2.44 million tonnes, a fourfold increase on the same period last year and eclipsing the 2.32 million tonnes imported in the whole of 2009. China rarely imports large quantities of aluminium but its rapid recovery from the coronavirus crisis pushed Shanghai aluminium prices well above London prices this year, opening a so-called arbitrage window for cheaper overseas metal

The spread between Shanghai and London prices peaked in July, when China became a net importer for the first time in more than a decade. The arbitrage window has since closed but metal has continued to flow in.

While overall imports are higher than in 2009, when a similar spread opened up as Chinese demand recovered from the global financial crisis, inflows of primary aluminium in 2020 - about 877,500 tonnes over January-October - are still well below the 1.5 million tonnes imported 11 years ago.

That is because this year's surge in aluminium imports has also been driven by a rise in inflows of unwrought, alloyed aluminium, which topped 1 million tonnes over the January-October period. ING senior commodities strategist Wenyu Yao said this category contains a lot of aluminium alloy ADC12, increasingly used by fabricators as China tightens restrictions on imports of aluminium scrap.

Sub-standard scrap that can't make its way into China needs to be processed elsewhere first, Yao said. "One way is becoming secondary ingot before entering China."