Some China-based non-ferrous metal producers and traders are looking for export opportunities after maritime prices rose sharply due to the Russian-Ukrainian conflict, while losses widened on imports, sources said. industry on March 4.
China’s domestic prices for non-ferrous metals, such as aluminum, alumina, copper and nickel, have not kept up with rising maritime prices after Russia’s invasion of Ukraine, making product exports profitable Chinese. China is generally a net importer of primary aluminum, alumina, copper cathodes and refined nickel.
The Russian-Ukrainian conflict has raised concerns about the tight supply of non-ferrous metals around the world, increasing maritime prices.
The pace of Chinese domestic price increases has been relatively slow as downstream consumers have grown wary due to a strong price environment and inventory buildup, sources said.
China’s copper cathode import premium declined as domestic demand showed no signs of rebounding and high copper prices led to closed import arbitrage.
During S&P Global Commodity Insights’ Platts Market on Close valuation process, Platts valued Chinese copper import premiums at $20/tonne plus cash from the London Metal Exchange, CIF China, on 4 March, for normal LME-registered electrorefined cathode marks, down $17/mt week-over-week and the lowest since June 21.
Import losses soared to 3,000 yuan/ton ($475/ton) on March 4, prompting domestic smelters to turn to exports, market sources said. Many traders were directing shipments to bonded warehouses, causing stocks to rise significantly, sources said.
A weaker ratio between the Shanghai Futures Exchange and LME prices could boost Chinese exports of semi-finished aluminum products, sources said. The ratio fell from 0.51 day-on-day to 6.21 as of 3:00 p.m. Beijing time on March 4, according to SHFE data.
The arbitrage opportunity for the import of primary aluminum into China has been closed due to widening negative margins following a surge in shipping prices, sources said. Maritime prices are not high enough to attract Chinese primary aluminum exports due to a 15% export tax.
Some Chinese exporters were looking for opportunities to ship more semi-finished aluminum products to take advantage of the market, sources said.
China’s widow of alumina import arbitrage has also been shut down, as shipping prices rise amid soaring aluminum and supply issues.
Chinese alumina could be flowing to the overseas market amid higher shipping prices as domestic refineries resume unused capacity or commission new projects, sources said.
Australian alumina was at a $120/mt premium to Chinese production at import parity on March 3, based on Platts valuations of $460/mt FOB Australia and 3,000 yuan/mt ex Shanxi factory. The assessment also calculates a freight rate of $63.10/tonne to ship 30,000 tonnes from Western Australia to Lianyungang, China.
China’s refined nickel import losses continued to widen, reaching around 16,000 yuan to 18,000 yuan/ton on March 4.
Market participants feared that shipments of refined nickel from Russia, previously destined for EU and US ports, could reach China, at a time when demand from downstream stainless steel manufacturers is low, sources said.
The SHFE and LME nickel price ratio fell to 6.77 on March 4 from 7.21 a week ago, according to SHFE data.
“Although theoretically you could export nickel from China due to arbitrage, I don’t know if anyone would because the production of pure nickel metal is quite low in China,” said a Chinese trader.