InvestorQ : What does the sharp pick up in Chinese aluminium imports mean for the prices of aluminium and for companies like Hindalco and Nalco?
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What does the sharp pick up in Chinese aluminium imports mean for the prices of aluminium and for companies like Hindalco and Nalco?

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Sam Eswaran answered.
4 months ago
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For the current year, China's aluminium imports have already touched a record annual high. The last time we saw such a huge surge in aluminium imports by China was just after the global financial crisis in the year 2009. This time it is even higher than the peak level of aluminium imports by China in 2009.

If you consider the 11-month period from January 2020 to November 2020, the total aluminium imports by China in this period was nearly 4 times the total imports in the same period last year. Even if you compared the previous peak of 2009, it is impressive. The last 2009 record was 2.32 MT of aluminium imports in the 12 months of 2009.

The question is why is China importing aluminium when it is already the world’s largest producer of aluminium? Actually, China has limited need to import aluminium but the sharp spike in Shanghai aluminium pushed it above the London price. The situation is very similar to the gap widening in 2009 due to the impact of the global financial crisis.

Like in 2009, the Chinese demand has recovered rapidly but Chinese metals are not viable as global aluminium is today cheaper than Shanghai aluminium by a margin. For Hindalco and Nalco, they have already made the best of the price hike on the LME and the robust demand and the price gap looks to continue in 2021, benefiting both the large aluminium producers.

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