Chinese aluminum imports in Sept up by 40pct

China remained a net importer of primary Aluminum in September, as imports of primary aluminum at 10.8 Kilo tonnes advanced 40% YoY and outpacing export levels at 1.2 Kilo tonne declined 81% YoY.

Barclays said that combined with a robust domestic production at 1.58 million tonne gained 21% YoY and a 47 Kilo tonne draw in SHFE stocks over the month apparent consumption of primary aluminum increased by a robust 25% YoY to 1.64 million tonne. This indication of demand strength ties in well with the NBS semis production figure which showed 27% YoY increase to 2.4 million tonne.

While domestic demand certainly appeared firm, aluminum semis exports fell by 15% MoM to 230 Kilo tonne the lowest level since February, signalling some softening in aluminum semis demand overseas. The alumina picture also remained constrained with imports down 8% YoY to 222 Kilo tonne and domestic production down sequentially tumbled 6% MoM to 2.8 million tonne suggesting some constraint at a primary smelting level.

Looking beyond September, the rise in SHFE stocks of nearly 40 Kilo tonne in October so far would appear to point towards a moderate softening in conditions. However, given that price signals remain firmly positive with the premium of SHFE to LME strengthening in October versus September, as well as sustained tightness in the SHFE time spreads, there is little sign of any significant unwind in market tightness.

Moreover, it is clear that the power situation in southern China remains extremely tight and with SHFE prices at their lowest level since May this year, there is a lack of price signal to drive an immediate supply response. Domestic demand remains healthy and although export weakness appears to creeping into the semis data, the overall level remains enough to keep the market tightly balanced.