Center Valley, Pennslyvania 07/07/2016 - Imports of primary aluminium and alloy into the US over the first four months of the year surged thanks to large increases in shipments from Russia, the United Arab Emirates (UAE) and Canada, according to a FastMarkets analysis of US Geological Survey (USGS) data.
Crude aluminium and alloy imports in January-April totalled 1.37 million tonnes, up 19 percent year-on-year, the USGS said.
The biggest increase came from Russia, which sent 226,000 tonnes to the US, a rise of 71 percent from 132,000 tonnes in the year-ago period.
This makes sense given the unprecedented weakness in the rouble at the start of the year and soft demand domestically and in Europe, which is the country's natural trading partner.
But the flow of Russian material could slow in the second half of the year because the rouble has rallied sharply in concert with the rebound in oil prices. The rouble is currently at 64.56 per dollar.
The second-biggest gain came from the UAE, which shipped 185,000 tonnes to the US in the first four months of 2016, an 81 percent year-on-year increase, according to the USGS.
Emirates Global Aluminium (EGA) can produce 2.4 million tonnes per year at its Dubai Aluminium (Dubal) and Emirates Aluminium (Emal) plants.
Imports from Bahrain rose to 44,300 tonnes in January-April, up 130 percent. The country's lone smelter is Aluminium Bahrain (Alba), which has capacity of 960,000 tonnes per year.
Interestingly, Saudi Arabia, which is home to Alcoa's Ma'aden Aluminium joint venture, only exported 16,400 tonnes to the US during the first four months of the year.
The Middle East in recent years has emerged as the world's key swing supplier, with its metal generally flowing to whichever region has the highest physical premiums. And the US has been the most profitable landing spot for an extended period.
Over the past year, the US Midwest aluminium premium on average has been about 4.5 cents per pound or $100 per tonne higher than the Rotterdam duty unpaid premium. This wide spread has encouraged metal to be diverted to the US.
But US premiums have recently come under downward pressure due to this flood of imports. This week, the US Midwest aluminium premium slid to a fresh five-year low of 6.9-7.25 cents per pound.
Sub-seven-cent premiums could discourage some imports; however, both European and Japanese premiums also remain weak. So there is no clear-cut best location to send excess aluminium supply at present.
Rotterdam duty unpaid premiums were stable this week at $65-75 per tonne while spot rates in Japan, South Korea and Taiwan were just $80-90 per tonne on a cost, insurance and freight (CIF) basis.
Elsewhere, Canadian cross-border shipments rose to 744,000 tonnes in January-April, up six percent year-on-year, due to the soft oil-sensitive Canadian dollar earlier in the year and higher production levels.
The annual rate of Canadian primary aluminium production in May totalled 3,213,291 tonnes, up 13.9 percent over the May 2015 rate of 2,820,355 tonnes, according the Aluminium Association of Canada.
This is largely due to Rio Tinto restarting production in July at its Kitimat smelter after an expansion and modernisation programme. Aluminium capacity at the plant in British Columbia has risen 48 percent to 420,000 tonnes per year.
(Editing by Mark Shaw)