China's CMRA and Russian Aluminium Association sign MoU to strengthen supply chain dynamics

On September 25, the China Nonferrous Metals Industry Association (CMRA) inked a memorandum of understanding (MoU) with the Russian Aluminium Association in Beijing, as was circulated by the board in a statement. The vice party secretary of the CMRA, Fan Shunke, asserted that this partnership was to focus on the alumina sector, aluminium products and aluminium fabrication without revealing much from the deal.

President Vladimir Putin is scheduled to visit China next month for a one-on-one conference with President Xi Jinping, and the MoU has been signed strategically just before the meeting. Russia's dependency on the largest economy in Asia has increased in recent years, primarily aiming at the energy and commodities market. Russia was eager to buy the core material for aluminium production, alumina from the Dragon after usual supplies from Ukraine, Australia and other offended nations were disrupted.

The reliance is so high that the Chinese and Russian aluminium industry associations are joining hands to run a smooth supply chain, strengthening ties in the aftermath of the invasion of Ukraine.

While Western nations have not directly imposed sanctions on the purchase of Russian aluminium, some buyers and banks have opted out of the trade due to ethical reasons or the increasing complexity of financing and logistics. As a result, there has been a surge in the amount of Russian metal being sent to China and London Metal Exchange warehouses.

This week, a Russian delegation, which includes officials from United Co. Rusal International PJSC, the country's largest aluminium producer, is attending an industry conference in China. During the conference, Rusal proposed that Chinese companies invest in an aluminium industrial park located in eastern Russia.

As per Rusal's first-half financial report, the company has experienced a 33 per cent increase in revenues from Asia in the first six months of 2023, compared to 26 per cent in the first half of 2021, before the war in Ukraine. However, the report does not provide a breakdown of sales to China.

Official data from Beijing shows that Chinese imports of Russian aluminium reached a record of approximately 131,000 tonnes in August. These purchases have been steadily increasing since the Kremlin's invasion of Ukraine in early 2022. Nonetheless, these flows remain relatively modest when compared to China's monthly domestic output of around 3 million tonnes.