- Total aluminium exports from China have climbed to the highest level in almost four years.
- US sanctions against Russian producer Rusal provided an opportunity for Chinese exporters to make up for the shortfall.
- Despite fears of a US-China trade war, CBA analyst Vivek Dhar expects Chinese aluminum exports to reach record levels this year.
Despite ongoing trade tensions with the US, total aluminum exports from China just rose to the highest level since December 2014.
China exported a record 2.7 million tonnes of aluminum in the first six months of this year, representing annual growth rate of 12%.
CBA commodities analyst Vivek Dhar said Chinese producers are taking advantage of higher prices to ramp up production.
And perhaps illustrating the complexities of global trade, the higher prices are a by-product of another round of US sanctions — this time against Russian alumnium producer Rusal.
“Rusal, which accounts for 6-7% of global aluminium supply, saw aluminium exports fall 9% year-on-yar from January to June. The company’s aluminium exports plunged in April after the US sanctions were announced on April 6,” Dhar said.
Rusal has since recouped some of those falls, after US authorities relaxed their stance following concerns raised by multiple governments and global mining companies.
In the meantime, the resulting shortfall provided an opportunity for Chinese producers to plug the supply gap.
Furthermore, “the aluminium market will continue to look to China to address any near-term shortage,” Dhar said.
That’s despite the direct inclusion of “aluminum ores and concentrates” in a $US200 billion list of Chinese exports that may be eligible for further US tariffs.
However, global shortages stemming from the Rusal sanctions mean China should have plenty of other suitors elsewhere.
“We expect China’s aluminium product exports to grow to a record level this year,” Dhar said.
For now, fears of a tit-for-tat escalation in the US-China trade war show no signs of abating.
On Wednesday night, White House Economic Advisor Larry Kudlow suggested further talks were being stalled by Chinese President Xi Jinping — a claim the Chinese foreign ministry rejected as “bogus”.
Dhar said the US currently accounts for around 15% of China’s aluminium exports.
And that number could rise now that Canada — which supplies more than 40% of US aluminium exports — is also facing a 10% tariff threat from the Trump administration.
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