China, the biggest producer of aluminum globally, is importing more of the lightweight metal from Russia, underscoring how trade ties are strengthening between the two nations as sanctions curb much of the rest of the world’s appetite for Russian commodities.
Russian sales of refined aluminum to China nearly trebled in April from the previous year to 88,859 tons, according to Chinese customs data. That’s the second-highest amount on record as Russia’s share of total Chinese imports grows in the wake of its invasion of Ukraine.
The backdrop to rising imports is the lingering impact of drought in southern China, which has affected the hydropower on which smelters rely and curtailed their output. Nationwide production in April fell 1% year-on-year to 3.334 million tons. But there are geopolitical considerations as well.
Russia needs to sell more aluminum to China because other nations are shunning its supplies due to the war. At the same time, Chinese buyers, who may not have easy access to US dollars, are able to pay in their own currency, advancing Beijing’s efforts to globalize the yuan at the expense of the dollar, which is usually used for cross-border commodities trading.
The trade works both ways. Russia has bought more Chinese alumina, the feedstock for aluminum, since the war began after its biggest producer, United Co. Rusal International PJSC, was forced to halt its Nikolaev refinery in Ukraine and Australia banned shipments because of the invasion.
China bought the most fuel oil in a decade last month, leading to the nation becoming a net importer of products for the first time since 2020.
Iron ore retreated for a third straight session as China’s peak building season starts to wind down amid a disappointing steel demand outlook.
The first gathering of the Asian metals community since the pandemic should have been a celebration, fueled by state stimulus and a long-awaited post-Covid rebound for the world’s top commodities consumer. But the resurgence never came.
In 2021, a remote coal town in northeastern China was forced to undergo an unprecedented financial restructuring. Its struggles since are an ominous sign for President Xi Jinping as other heavily indebted municipalities look set to follow suit.
(With assistance from Winnie Zhu and Ailing Tan)