The source said that the London Metal Exchange (LME) price is low, opening a rare arbitrage window for Chinese investors, they can sell aluminum in the Shanghai market and buy in LME, and this may bring some imports.
“We started selling more to Chinese end users last week,” said an Asian corporate executive who traded aluminum and produced aluminum products in China. "China's imports will probably increase in the next two or three months, but the increase may not be great."
In the first four months of this year, China's primary aluminum imports fell by 79% year-on-year.
The manager and sales manager of a state-owned aluminum smelter said that at present, Guangdong factories that use aluminum ingots to produce aluminum semi-finished products such as aluminum profiles and auto parts are the main buyers, and they can import aluminum almost duty-free and produce export goods.
At present, the profit that investors can make is not high.
The price of spot aluminum ingots for Chinese buyers is about 105-130 US dollars per ton, which is nearly two-thirds lower than that in January. This, coupled with the London Metal Exchange (LME) spot aluminum prices have fallen more than 6% since the beginning of the year, resulting in a decline in import prices.
At the time of the global market's decline in aluminum prices, China's spot aluminum prices were steady. On Thursday, it reported about 13,000 yuan (6.2017, 0.0039, 0.06%) (US$2,096), and at the beginning of January it was reported at 12,900 yuan. China's large smelters are constrained by sales initiatives.
Traders said that the import price of aluminum ingots this week was about 13,000 yuan per ton, about 16,000 yuan at the beginning of the year.
Since March, large Chinese smelters have restricted the sale of spot aluminum ingots to support domestic prices.
Traders and the aforementioned smelter sales manager said that if investors increase the Shanghai aluminum contract for arbitrage, these smelters may further cut sales, especially if the contract delivery metals are mostly produced by them.
The smelter manager said that these smelters may use these aluminum ingots to produce semi-finished aluminum.