Aluminum shipments from China have probably peaked after surging 43 percent in the first quarter as sustained supply from the country depresses global prices and makes exports uncompetitive, according to CLSA Ltd.
Exports of unwrought aluminum and aluminum products rose from a year earlier to 1.21 million metric tons in the January-March quarter, according to a statement released by the General Administration of Customs Monday in Beijing. Shipments shrank 15 percent in March to 360,000 tons from the previous month, according to customs, as prices fell for a second month.
China, producer of about half the world’s primary aluminum, continues to add capacity, while smelters elsewhere struggle to cut enough supply to buoy prices. The surcharges that consumers pay to obtain the metal are falling from an all-time high as demand can’t keep up with record exports from China. Spot shipments from China turned uneconomical in March because of falling physical premiums and weak London Metal Exchange prices, Citigroup said Monday.
“The imports seen in the first quarter probably mark a near-term peak,” Ian Roper, a commodity strategist at CLSA, said by phone. “Prices have fallen enough that the Chinese economics for export currently don’t work.”
Aluminum for delivery in three months on the LME were little changed at $1,765.50 a ton at 3:55 p.m. in Hong Kong. Prices have retreated 4.7 percent this year. The premium added to the LME price for immediate delivery fell to as little as $225 a ton in Europe last week, the lowest for 15 months, according to Harbor Intelligence.
China produced a combined 4.6 million tons of primary aluminum in January and February, a record for the first two months of a year, according to data from Antaike Information Development. Aluminum product output surged 21 percent in that period to 6.9 million tons, according to the National Bureau of Statistics.
Alcoa Inc., the largest U.S. aluminum producer, forecast a global oversupply of the metal for 2015 and the slowest rate of growth in global consumption in three year. China will add more than 80 percent of new global capacity this year, according to the company’s data.
China’s net aluminum and product exports will exceed 5 million tons this year, representing about 18 percent of the rest of the world’s consumption and helping reduce the so-called all-in prices, which include LME cash rates and physical premiums, Citigroup Inc. said in a report April 9.
— With assistance by Alfred Cang, and Alex Davis