China’s Metal Exports

China’s 2016 aluminum exports showed a very different trend compared to 2015. The primary exports had a big drop. In the middle of the year, we saw the year high record of semi exports with 370Kt. Although primary exports dropped, it was because so much metal was being sold in liquid form. It did not mean China had less metal in the market. It showed the over-supply appeared in the downstream and it surged the semi exports later in the year.

China’s semi exports was around 4.1 million tons in 2016. It was a shade less than 2015’s figure with 4.2Mt. But the problems caused by China’s new transportation policy and some restrictions because of the environmental inspections caused hiccups in China’s domestic metal flow, and that led to reduced metal into the downstream sector. It is no surprise that 2016 semis exports were lower than the previous year.

2017 will be an interesting year for China’s aluminum exports. There are unresolved issues both domestically and internationally. If China goes ahead and cuts metal capacity in the northeast, it will cause semis exports to shrivel. The USA has launched a WTO case against China’s aluminum industry. If that action is successful, that could also lead to changes in China’s export volumes. We have shared our thoughts on these issues with our subscribers.

All things being equal, AZ China expects semis exports to be stronger in 2017. That’s because at the core, supply still exceeds demand, and that over-supply is funneled into semis.

On February 2^nd, US Department of Commerce made the final ruling by putting on anti-dumping duties and countervailing duty rates on China stainless steel strip exports to the US. It is perhaps an early indicator of the sorts of actions the US might take on aluminum.

Although the Chinese currency showed some strength at the end of 2016, by the strong control on domestic real estate at the end of 2016 and 2017 and the high debt to GDP rate, China’s economy will face challenges in 2017. RMB currency may remain in a devaluation trend. If RMB will continue devalued, it will offer certain support for the metal exports.

Overall, China’s aluminum exports will face lots of uncertainty in 2017. Both semi exports volume and price might be changed in 2017 under the complicated domestic and world market. No matter how China’s aluminum exports will change, it will have a big impact on the world aluminum market by its large capacity volume.