Aluminum Imports by China to Drop on Prices, Antaike’s Li Says

By Bloomberg News

Sept. 25 (Bloomberg) -- Aluminum imports by China, the world’s largest user, will decline because the gap between domestic and international prices is not enough to encourage purchases, said a state-owned research company.

Inbound shipments of primary aluminum may be 100,000 metric tons per month from now to the end of December, Li Yang, senior aluminum analyst at Beijing Antaike Information Development Co., said in an interview yesterday. That compares with 117,213 tons in August and is down 72 percent from a record 362,400 tons in April, according to data compiled by Bloomberg.

Aluminum, used in homes, cars and drinks cans, has advanced 19 percent this year on the London Metal Exchange as China’s 4 trillion yuan ($586 billion) stimulus package and state stockpiling increased imports to a record and as the world recovered from its worst recession since World War II.

“We don’t expect another Chinese stimulus spending plan unless there is a double dip recession in the U.S. and Europe,” Li said. Therefore “we’re unlikely to see an unusual amount of imports next year.”

Shipments over the rest of this year may be mostly for tolling, or importing the primary metal in exchange for exporting the processed products, he said, adding he does not see any Chinese tax changes on aluminum before the year-end.

Commercial stockpiles of primary aluminum in China are currently at 400,000 to 500,000 tons, excluding State Reserve Bureau inventories of 590,000 tons, Li said. At the start of the year there was a deficit of commercial supplies because of the bureau’s buying on the domestic market, he added.

Production of primary aluminum in China may decline by 4 percent to 13 million tons this year from 13.6 million tons in 2008, and recover to as much as 14.5 million tons in 2010 as some facilities resume output. Consumption may be 12.5 million tons this year, the same as last year, he said.

He expects the price of aluminum on the London Metal Exchange to drop to $1,500 a ton by the end of the year and the price on the Shanghai Futures Exchange to decrease to 13,500 yuan per ton. Prices may return to $2,000 a ton and 16,000 yuan a ton next year because of improved global demand, he said.

--Li Xiaowei. Editor: Richard Dobson.

To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net