There's been a lot of attention lately on imports of commodities like copper and coal into China.
Uncertainty has reigned around shipments coming into those markets. But at the same time, one little-followed metal has been having a big year in China--with import growth far outpacing other commodities.
That's alumina.
Black China noted last week that alumina imports into China are up a stunning 72% so far this year, for the period January to July. So far totalling 3.2 million tonnes.
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These experts also predict that the trend toward much higher alumina imports is accelerating. Mostly because of problems in the aluminum supply chain caused by Indonesia.
Indonesian mines used to be the go-to supplier of the aluminum ore bauxite into China. Up until the beginning of 2014, when the Indonesian government banned exports of unprocessed metal--including bauxite.
That's reportedly left Chinese manufacturers scrambling for supply. But with no clear alternative producers emerging in the region, there hasn't been enough bauxite coming into the country. Meaning a looming shortage of the end-product produced from bauxite: alumina.
That's forced aluminum firms to turn to direct imports of alumina. Filling the gap left by flagging bauxite imports. Basically, China has been pushed up the value chain in terms of its buying.
The trend toward higher alumina imports is also going to be affected by news last week from Chalco, one of China's biggest aluminum firms. Which reported that one of its major alumina-making plants in Zhengzhou has been disrupted--possibly indefinitely.
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Platts reported sources from Chalco as saying that production at the plant had been shut down after damage to its "red mud dam". Possibly implying problems with tailings storage systems.
This could take some time to fix. And in the meantime the Chinese market will be without the 2.4 million tonnes per year of alumina that the factory usually produces.
All of which makes this a situation worth paying attention to. More updates over the coming weeks.
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Here's to filling the void,
Dave Forest
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