United Co. Rusal sanctions from the U.S. have disrupted the pace of supply in the global aluminum market. As buyers sought alternative suppliers from other producers, the amount of aluminum exported from China to the global market surged in August.
According to the data released by the General Administration of Customs of China, the export volume of unwrought aluminum and related aluminum products in China increased to 517,000 tons in August, the same as 520,000 tons in July, which was the highest level in more than three years. From June to August this year, China’s aluminum exports exceeded 1.5 million tons, a record high for three consecutive months. At the same time, the export volume in the first eight months of this year has increased by 15% compared with the same period last year.
In March of this year, the United States imposed a 10% tariff on imported aluminum. In April, the United States announced sanctions against Rusal. Two initiatives have split the global aluminum supply market into four markets: China, Russia, the U.S. and overseas.
China is the world’s largest aluminum producer, with a market share that is already more than half of the world’s, and Russia is second. China also continues to increase exports of alumina (aluminum raw materials), and shipments will keep expanding. Aluminum Corp. of China Ltd. said this month that its exports totaled more than 300,000 tons from May to July this year, compared with only about 11,000 tons in the same period last year.
In the Russian market, due to U.S. government sanctions, U.S. traders have to stop trading with RUSAL by October 23. It is widely believed that Russian aluminum exports will decline. The supply gap in the international aluminum market needs to be filled by Chinese manufacturers.
In the US market, the cost of aluminum producers and downstream industries in the United States has been affected by tariffs on steel and aluminum. Due to the addition of tariffs, Alcoa Corporation will have an additional expenditure of up to $14 million per month.
The low production of Alunorte in Brazil has also put pressure on the aluminum global supply chain.
Rusal President Oleg Deripaska is still continuing to negotiate with the U.S. authorities to lift the sanctions ban before the October deadline. At the same time, the aluminum products buyers are still rushing to buy the goods to prevent the negotiations from getting worse.
If the U.S. continues to impose sanctions on RUSAL in October, the aluminum price may exceed its a seven-year high in April.