China aluminum exports at 3-year high on rising overseas prices

Aluminum shipments from China, the world’s largest producer and user, rose to the highest level in three years as higher prices overseas encouraged exports of the metal used in everything from aircrafts to window frames.

China shipped 380,000 metric tons of unwrought aluminum and aluminum products in July, according to data released by the country’s General Administration of Customs today. That was the highest since 390,000 tons in July 2011 and up 23 percent from a year earlier, customs data showed.

The premium added to the LME price for immediate delivery at Rotterdam warehouses is at a record $380 a ton, compared with about $200 a ton a year ago, according to Metal Bulletin data. The surcharge doesn’t include European Union tariffs. The global aluminum market will move into a deficit of 579,000 tons this year, increasing to 619,000 tons in 2015, Goldman Sachs Group Inc. said in a report July 23.

“Producers increased exports to pursue profits outside of China,” said Wang Chunhui, an aluminum analyst at SMM Information & Technology Co. in Shanghai. “High overseas aluminum premiums are restraining demand from fabricators in Europe and increasing demand of Chinese products.”

Increasing Chinese exports in the second half this year will lower prices in London and narrow the premium over Shanghai contracts, Ivan Szpakowski, a commodity analyst at Citigroup Inc., said in an interview July 31. Exports of Chinese primary aluminum, used as a feedstock for fabricators, are charged a 15 percent duty while shipments of semi-finished and finished metal are not taxed. China also offers tax rebates on exports of some aluminum products.

The light metal, which entered a bull market on the London Metal Exchange on July 22, has gained 12 percent this year. The contract slipped 0.9 percent to $2,008 a ton on the LME at 2:31 p.m. in Shanghai. Aluminum for October delivery on the Shanghai Futures Exchange traded at 14,080 yuan ($2,287) a ton.

China also imported 340,000 tons of unwrought copper and copper products in March, declining for a third month, customs data show. Shipments to China are expected to continue falling this month as they’re becoming less profitable, according to Ian Roper, a Singapore-based analyst at CLSA Ltd.

“It’s not been attractive to ship it to China these days, so I’d expect on that basis the shipments to China are going to be weaker in August,” Roper said.

Iron ore imports by China rose to 82.52 million tons in July, the third-highest this year, from 74.57 million tons in June, according to customs.