Cracks frequently appear in the global primary alu

Cracks frequently appear in the global primary aluminum supply chain. Does China want to take on the responsibility of export

since the United States imposed sanctions on Oleg Deripaska and his aluminum Kingdom Rusal in the first quarter of 2019, this shock wave is still shaking the global market

last week, Rio Tinto announced Force Majeure for some raw material contracts. This week, the company issued an early warning that it may adjust its aluminum production forecast this year due to the adoption of high-quality medium carbon steel and alloy structural steel

at the same time, some large trading houses in Japan have asked Rusal to stop supplying aluminum to them for fear of being subject to secondary sanctions. Japan imports about 300000 tons of aluminum from Russia every year, accounting for about 16% of the country's total import demand

at present, this once abundant aluminum supply chain has broken along many lines. With the intensification of supply concerns, the market turned its attention to China, hoping that it could become a potential source of aluminum supply

the aluminum inventory in the registered warehouse of Shanghai channel smooth futures exchange is nearly 1million tons. If the price is right, the aluminum will flow out of China

arbitrage window opens

since the US Treasury Department announced sanctions against Russia on April 6, the price of cars made by London futures aluminum using micromillr technology ABS has skyrocketed at the same crash level. London Metal Exchange (LME) three-month aluminum has risen by more than $600 to $2718 per ton in the past two weeks, a higher price since May 5, 2011

this opens the door to widening the price gap with Shanghai aluminum, which has little response to fluctuations in the London metal market

however, CRU analysts said that in order to promote China's aluminum exports and fill the supply gap in other parts of the world, aluminum prices need to rise further. This is because China's primary aluminum exports must pay an export tax of 15%, which is different from the export of value-added tax rebate goods

according to the trend of London and Shanghai metal markets, CRU estimates that the aluminum price will be close to US $3000 per ton, so that 991780 tons of aluminum in the warehouse of Shanghai futures exchange can be delivered out of the warehouse

however, if the export route of Russian aluminum products from Russia is blocked, it becomes a necessary condition for the aluminum price to rise to $3000

eoin Dinsmore, head of raw metal and product research at CRU, said that long before the sanctions, CRU had expected the aluminum supply gap outside China to be about 1.8 million tons

coupled with the possible reduction of 200000-230000 tons in Russia's monthly exports, the demand for Chinese aluminum will become urgent

Goldman Sachs agrees with this point and believes that the complete interruption of Russian aluminum exports may make the price as high as $3200

Goldman Sachs' view is that Rusal will be restructured to bypass sanctions, so that production and exports can be sustained, but Goldman Sachs still raised its price forecast to reflect this uncertainty