8 Mar

Alcoa’s Aluminum Exports Continue to Rise, Concerns Persist

WRITTEN BY Mark O'Hara FEATURED IN Macroeconomic Analysis and Basic Materials

Alcoa

While Chinese steel exports have been in a secular downtrend after hitting a record high in 2015, the country’s aluminum exports have continued to rise. The aluminum exports hit a record high last year. China’s aluminum exports hit another monthly record in January. US aluminum producers like Alcoa (AA) and Century Aluminum (CENX) see Chinese aluminum exports as a challenge. Last year, when President Trump imposed the Section 232 tariffs on aluminum imports, Alcoa urged the administration to address the core issue of Chinese overcapacity.

Alcoa’s Aluminum Exports Continue to Rise, Concerns Persist

After rising YoY (year-over-year) for 14 consecutive months, China’s aluminum exports fell 7.8% YoY in February. The exports also fell 38% sequentially. In absolute terms, the aluminum exports in February were the lowest level since February 2017. While the sharp fall in China’s February aluminum exports is welcome news for aluminum producers like Alcoa, it should be taken cautiously.

RUSAL

In February, China’s aluminum exports are usually below the trend. The country’s aluminum exports are still up this year if you combine January and February. Last year, China’s aluminum exports were boosted by US sanctions on RUSAL—the leading Russian aluminum producer (RIO) (XME). However, the sanctions have been withdrawn. We could see western buyers warm to RUSAL metal after staying away from the company due to US sanctions.

Alcoa and other aluminum producers have to be careful due to concerns about aluminum demand growth. Read Should You Expect More Gains from Alcoa in 2019? to learn more.

Next, we’ll discuss China’s copper imports.

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