China's primary aluminium imports fall, exports surge in May amid widening arbitrage gap

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In May 2026, China's primary aluminium imports fell while exports rose. While import sources remained heavily concentrated with Russian material still ranking first by volume, export flows diversified significantly across Asian markets. Total exports rebounded sharply month-on-month, though year-on-year declines remained notable due to a high base effect, with shipments to South Korea recording an explosive increase.

According to customs data, domestic primary aluminium imports reached approximately 208,200 tonnes in May, marking a decrease of 6.72 per cent compared to the same period last year and a substantial drop of 21.55 per cent from April. Cumulatively, imports for the first five months of 2026 totalled about 1.1193 million tonnes, reflecting a 5.84 per cent increase year-on-year.

On the export side, volumes recovered to around 22,200 tonnes, down 31.59 per cent year-on-year but surging 42.31 per cent month-on-month. The January-May exports stood at 75,700 tonnes, up 13.0 per cent year-on-year. Consequently, net imports for May were approximately 186,000 tonnes, down 2.49 per cent year-on-year and 25.54 per cent month-on-month, bringing net import figure for the first five months of 2026 to 1.0436 million tonnes, a 5.36 per cent increase.

Internationally, a narrative of physical shortages drove LME aluminium prices higher throughout the month. Production cuts in the Middle East tightened overseas availability, drawing down inventories and reinforcing expectations of supply constraints. Domestically, however, the SHFE aluminium contract faced headwinds from a traditional consumption off-season and persistently high production run rates, which limited its ability to follow LME gains. This dynamic caused the SHFE-LME ratio to remain persistently low, widening the import loss to levels that effectively sealed off merchant arbitrage activity. Only long-term contract obligations and rigid demand sustained import volumes.

The structure of imports highlighted a continued reliance on Russia, which supplied approximately 189,600 tonnes, accounting for 91.1 per cent of total inbound shipments. However, this volume decreased by 14.5 per cent from the previous month. Notably, the share of toll-processing trade within Russian shipments rose to about 38.7 per cent. Despite a slight pullback in overseas premiums, Rusal continued to reduce direct ingot shipments to China amid the import deficit, and general-trade imports are expected to remain under pressure in June.

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On the export front, the market utilised strategic inventory adjustments to capitalise on regional demand. With the import window firmly shut, traders judged that short-term arbitrage opportunities were unlikely to reopen. Consequently, significant volumes of primary aluminium previously stockpiled in bonded zones were re-exported to high-premium markets such as South Korea and Taiwan. This move allowed traders to avoid the losses associated with importing the metal into China and paying duties, directly boosting export statistics.

Export destinations shifted noticeably, led by India, which maintained its position as the top recipient. South Korea and Taiwan followed closely, with both recording sharp increases. The surge in South Korean imports was largely attributed to concentrated restocking, as local fabricators and logistics centres entered the quarter with low inventories, compounded by routine quarter-start procurement rhythms. The United States, Mexico, and Thailand also remained key export markets. Overall, exports demonstrated a diversified distribution, with Asian regions dominating the trade flow. While the export window remained intermittently open, with primary aluminium exports rebounding, the year-on-year decline still remains significant.

Note: This news is published under a content and exchange agreement with Mysteel