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China lifts aluminum exports as Western production slides | |
admin | |
2022-04-04 | |
发布年 | 2022 |
语种 | 英语 |
国家 | 国际 |
领域 | 地球科学 |
正文(英文) | ![]() Aluminum lines on a conveyor belt. (Stock Image)
(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.) China is stepping up exports of aluminum to fill a widening supply gap in Western markets. The country shipped out 26,378 tonnes of primary aluminum in February, the highest monthly total since 2010. Imports collapsed over the first two months of the year, with the result that China turned a net exporter in February for the first time since November 2019. This is a significant shift in trade patterns. China sucked in massive amounts of primary metal over 2020 and 2021 as domestic production struggled to match demand. The pendulum is now moving in the opposite direction as high power prices curtail European production, sending both the London Metal Exchange (LME) price and physical premiums soaring. The Western supply crunch is also incentivizing an accelerating export flow of Chinese semi-manufactured products to Western markets. Such “semis” exports have historically been the cause of much grief in the global aluminum sector, with Western countries imposing a raft of anti-dumping duties to protect domestic markets. Right now though, the rest of the world may need China’s metal in whatever form it can get. China flips to net exporter of primary metalChina hasn’t exported much unwrought aluminum since the 2006 imposition of a 15% export tax. The world’s largest producer of the metal didn’t need to import much either until 2020, when domestic production started stalling as power-hungry smelters curtailed output to meet Beijing’s energy efficiency targets. China soaked up 1.065 million tonnes of primary aluminum from the rest of the world in 2020 and another 1.580 million last year. That boom has come to an abrupt end. Imports in January and February slumped to 57,000 tonnes from 245,000 tonnes in the same period of 2021. February’s tally of 18,343 tonnes was the lowest since May 2020. As LME prices have risen faster than those on the Shanghai Futures Exchange, the arbitrage has switched against imports and in favour of exports. Those of primary metal still have to overcome the export tax headwind and it’s possible that outbound flows are coming from bonded warehouses sitting outside China’s tax regime. Two shipments accounted for most of February’s exports – 5,000 tonnes to Italy and 20,100 tonnes to Montenegro. The Balkan country might seem an unlikely destination for Chinese metal, but its only smelter – KAP – wound down primary production at the end of last year due to high power prices. It is likely using imported metal to feed its product manufacturing lines which are still operating. Product exports accelerateThe widening export-friendly arbitrage is stimulating more shipments of Chinese aluminum products, which not only escape the tax on primary metal but come with a VAT rebate. Semis exports fell in both 2019 and 2020, partly because China’s own demand was robust and partly because of the growing number of tariff barriers erected by other countries. That trend reversed sharply last year, when product shipments rose by 18%, and has accelerated this year with exports surging by 21% year-on-year in January and February. Because of the tax rebate, aluminum is much more likely to flow out of China in this form than as unwrought primary metal. Researchers at AZ Global consultancy for example estimate that Chinese exporters of plate and strip can currently achieve margins of around $1,000 per tonne by shipping through the arbitrage window. The likelihood is that semis exports are going to continue growing over the course of the year. ![]() China production recoveryChina’s aluminum sector seems to be collectively recovering from its power problems as the government eases back on its quarterly energy efficiency targets. The country’s annualized output grew by 1.8 million tonnes in January and February, according to the International Aluminium Institute (IAI), and more is on the way. AZ Global estimates 15 Chinese smelters with a collective capacity of 1.2 million tonnes started lifting output in March, with a likely 16% boost to production. This smelter resurgence however is going to hit the domestic market just at the wrong time, as covid-19 lockdowns cramp demand. Such Chinese supply-demand mismatches have in the past been resolved by higher semis export flows, and there’s no reason to think this year is going to be any different. The backlash from other countries however may be conspicuous by its absence this time around, given mounting supply chain problems outside of China. Western output slidingWhile China’s aluminum production is recovering, that in the rest of the world is falling. European smelters were already struggling with soaring energy costs before Russia’s invasion of Ukraine. Power prices have since risen further, with Germany’s Trimet the latest to confirm it is reducing production further at one of its sites. West European production fell by almost 10% in the first two months of this year, and annualized run-rates slipped below 3.0 million tonnes for the first time ever in February. There is also a very big question mark over Russian supply, a key component of Europe’s supply chain. Rusal, the country’s giant aluminum operator, is not directly sanctioned but is facing a growing number of secondary sanctions such as a ban on Australian exports of the alumina needed to run its smelters. That compounds the company’s raw materials headaches after the closure of its Ukrainian alumina refinery, and there are signs its internal supply chains have backed up all the way to its bauxite operations in Guinea. The IAI figures show Eastern European aluminum production holding steady over the first two months of the year, but for how long is the big unknown. Equally uncertain is the status of Russian aluminium as a tradeable commodity given the growing number of companies that are exiting their Russian business after the country’s “special military operation” in Ukraine. European physical premiums are still rising, that for duty-paid aluminium is currently at an all-time high of $555 per tonne over LME cash. US premiums are also on a tear as buyers are forced to compete with Europe for imports. Both markets need more aluminum. China, it seems, is going to supply it. (Editing by Jan Harvey) |
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来源平台 | Minging.com |
文献类型 | 新闻 |
条目标识符 | http://119.78.100.173/C666/handle/2XK7JSWQ/348269 |
专题 | 地球科学 |
推荐引用方式 GB/T 7714 | admin. China lifts aluminum exports as Western production slides. 2022. |
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