Chinese alumina trade slumps

By Davide Ghilotti
Published: Thursday, 26 January 2017

The Asian country slashed its purchases of alumina in 2016 while its exports of the mineral halved, on the back of production disruptions within the country coupled with reduced demand on the external market.

Chinese alumina imports fell for eight consecutive months to November 2016 against the same period in the previous year, showing double-digit decline rates exceeding 50% on several occasions, customs data shows.

The country imported just over 261,000 tonnes alumina last November, marking a 32% drop in demand year-on-year (y-o-y).

This is the latest monthly decrease after seven double-digit declines in imports in the previous months, starting from April, when deliveries into China fell 68% to just 102,000 tonnes.

July, August, September and October saw y-o-y imports slump by or exceeding 60%.

On average in the period between April and November, Chinese alumina imports fell by 53% against 2015.

Australia remained the largest supplier of alumina to China in 2016 to date, although shipments declined 38% to 1.6m tonnes. The producer dwarfed all competitors in terms of sales to the country. For comparison, all other main suppliers to China shipped volumes below 300,000 tonnes in the same period.

Only Indonesia saw its trade to China increase in the first 11 months of last year, reaching close to 282,000 tonnes.

The three other leading origins – Vietnam, India, Brazil – posted lower shipments into China. Vietnamese exports to China dropped 36% in January-November to below 277,000 tonnes, as did Indian (-66%, 211,757 tonnes) and Brazilian shipments (-37%, 195,291 tonnes).

In the 11 months to November 2016, alumina shipments reaching China totalled 2.66m. Compared with the same period the year before, demand for imported material in the country fell by 1.32m tonnes, equivalent to over one-third.

In value terms, total alumina trade to China in the period lost almost half its value (-48%), falling to $746.8m in total worth.

Chinese alumina imports 2015-16 
new8_1
Source: Chinese customs data 

Chinese alumina exports 2015-16 
new8_2  
Source: Chinese customs data 

Exports

China’s own exports of alumina grades posted a similarly stark slowdown in 2016 to November against peaks reached during Q3-Q4 2015.

The latest available data shows November alumina exports out of China at a mere 2,500 tonnes, or 97% down from 2015.

In January-November 2016, total alumina exports stood at just over 104,000 tonnes, or down 64% y-o-y. Compounded by a flatness in prices, exported value fell 54% in the period, to $62.5m.

Part of the decline may be related to the widespread facility shutdowns that took place across China’s main industrial areas beginning in the summer months of 2016, as the government clamped down on polluting production practices.

Under Beijing’s renewed efforts to enforce anti-pollution measures, industrial activities are required to now be powered by natural gas. This led to several bauxite-producing factories that relied on coal energy being closed, thus reducing the availability of raw material for alumina production.

Further restrictions to bauxite and alumina processing operations were imposed in October and December.
Sources speaking to IM in early January noted that the availability of alumina products was tight on the back of reduced Chinese production in the final months of last year.