The latest data on China's aluminum imports and exports suggest that the Country is becoming a conduit for the metal.
{alcircleadd}China's imports of metal in Q1 were up by over 200 per cent compared to Q1 2023. With the open arbitrage window, bringing metal to China became quite profitable. AZ Global calculated that the typical yield was a profit of almost RMB 900/tonne. The principal suppliers of metal were Russia, India and Indonesia. Russia's role as a supplier of metal is plain to see - Russian imports were up 127 per cent to 394,000 tonnes. India's supply grew by an even bigger percentage. India recorded an almost 800 per cent growth to 80,000 tonnes.
Although some Yunnan smelters were down during most of Q1, it's not as though China was in desperate need of metal. China's economy has been limping along, and the major consuming sector was again the automotive and transport sector, especially electric vehicles.
With all that extra metal flowing in, one could be forgiven for thinking that inventory must have built up over the period. However, inventory was down by almost 10 per cent compared with the end of Q1 in 2023. So where did all the metal go?
China's metal exports grew by almost 10 per cent during the same period.
Exports to the USA grew by about 13 per cent quarter over quarter, while exports to Mexico grew by 12 per cent. Exports to other ports, including Japan and South Korea, also rose.
China's exports came in at 2.4 million tonnes, compared to exports of almost 800,000 tonnes.
You may see newspaper articles and the like commenting on China's consumption numbers, but you need to remember that all Chinese consumption numbers include metal that is subsequently exported.
Will China continue to hit such strong trade numbers? Unlikely. The arbitrage window has closed. President Biden has imposed new tariffs on Chinese metal, as has the Mexican government.
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