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China Might Want to Thank Trump for Record Aluminum Exports

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Jan. 14 2019, Updated 3:01 p.m. ET

Aluminum exports

In the previous article, we noted that Chinese steel exports have fallen on a YoY basis for three years, and last year’s exports were roughly 38% lower than 2015 highs. Like steel, China has massive aluminum overcapacity. However, while Chinese steel exports have been on a downtrend, its aluminum exports surged to a record high last year.

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Exports rose

In December, China exported 527,000 metric tons of unwrought aluminum, a YoY rise of 19.7%. Chinese aluminum exports rose on a yearly basis every month last year. Overall, China exported 5.8 million metric tons of unwrought aluminum last year, which is 20.8% higher as compared to 2017 levels. Aluminum producers including Alcoa (AA) and Century Aluminum (CENX) blame higher Chinese exports for falling global aluminum prices.

Key drivers

To be sure, China’s aluminum demand has taken a hit amid the slowdown in automotive sales. The automotive industry (F) (GM) is the key aluminum end consumer. The slowdown in construction activity is also taking a toll on China’s aluminum demand. Facing a domestic demand slowdown, Chinese aluminum smelters looked overseas to offload their excess produce. President Trump’s sanction on RUSAL, the largest aluminum producer outside of China, was a golden opportunity for Chinese smelters last year. As buyers shied away from RUSAL metal, fearing US sanctions, Chinese aluminum exports took up the slack.

However, RUSAL sanctions could be finally waived now, as the company restructured its board last year in an apparent deal with the United States (SPY).

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