China¡¯s aluminium sheet, plates and strips export drop 1.8% MoM in January, but up 20% YoY

According to the data from China Customs released over the weekend, the country’s exports of aluminium sheet, plates and strips came in at 246,000 tonnes in January, down 1.8 per cent from 250,000 in December, but up 20 per cent from 205,000 tonnes year-on-year. This decline in China’s export volume in the said month is attributable to narrowed arbitrage window on yuan appreciation and higher SHFE/LME aluminium price ratio.

However, even though the export grew in January year-on-year, it was 0.9 percentage point slower compared with the earlier month (December 2018).

The yuan rebounded about 6.7 versus the US dollar for much of January. For the same month, the ratio of the most active aluminium contract on the Shanghai Futures Exchange to the three-month aluminium on the London Metal Exchange averaged 7.22 compared with the reading of 7.14 in December. This reflected that SHFE aluminium outperformed its LME counterpart at the start of 2019.

Moreover, the road shipping services were closed in the later of January due to the occasion of the Chinese New Year holiday, which further impacted China’s aluminium sheet, plates and strips export in January.

Some firms also told SMM that their export orders declined because of shrinking profit margins owing to firm yuan and high SHFE/LME aluminium price ratio. The overall orders for the first quarter of 2019, however, relatively held stable. Orders in April and May might see a fewer drop, as SMM survey reports.

China's export orders for aluminium cast rolled coils also shrank, as some firms told SMM. Growing aluminium supplies overseas likely accounted for the decline.

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