According to new forecasts from CRU, a leading commodities consultancy, China will import more than 1m tonnes of aluminum a year by the end of the decade.
The consultancy predicted that the appreciation of the renminbi, combined with higher prices for energy, labor and raw materials would make China’s vast aluminum industry less competitive.
The future role of China in the aluminum market is a subject of heated debate among analysts, traders and producers. The country is the world’s largest producer and consumer of aluminum accounting for roughly 40% of the global market of 40m tonnes a year. Until 2007, it was a large net exporter of the metal.
However, since then its aluminum trade has been largely balanced, apart from an opportunistic wave of imports in 2009 with Chinese smelters selling to the domestic manufacturing industry which is in turn a large exporter of semi finished aluminum products.
Aluminum is the most widely used metal after steel with a variety of applications from construction to consumer and industrial products such as cars, aircraft and drinks cans.
CRU predicted that net Chinese imports of aluminum would rise to 1.4 million tonnes in 2020 compared to just 70,000 tonnes last year. In the next decade we predict China will not be able to keep pace with its demand growth. The task will then fall to producers in the world ex China to meet the supply shortfall.”
The prediction, while bullish for non Chinese aluminum producers such as Rusal, Alcoa and Rio Tinto, is more conservative than some other forecasters. CRU predicts that net imports will remain small below 200,000 tonnes until 2015.
Some analysts and producers believe large Chinese imports could come much sooner as the country’s aluminum smelters, some of which count as the highest cost producers in the industry are forced out of business by rising power prices. Inventories of the metal at Shanghai Futures Exchange warehouses have fallen sharply to their lowest since February 2008.
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