China won’t solve Russia’s alumina crunch

Still, China is nowhere close to helping Russia make up for the alumina shortfall.

According to S&P Global, Russia imported a combined 275,000 metric tons per month from Australia and Ukraine prior to its invasion of its neighbor on Feb. 24, with the state-owned aluminum giant Rusal receiving the bulk of the supplies. China’s alumina exports make up a tiny fraction of that. Plus, China—the world’s biggest aluminium producer—needs alumina feedstock for its own smelters.

An analyst from commodities consultancy Wood Mackenzie told Reuters earlier that China could potentially buy up Australian alumina exports originally intended for Russia, then on-sell those supplies. But Chinese customs data so far hasn’t shown a dramatic increase in the country’s purchase of Australian alumina. One explanation could be the fear of secondary sanctions.

Alumina exports up, total exports down

So far, Russian aluminium giant Rusal has not been sanctioned. If it were, it could drive up already-high alumnum prices. The CEO of global mining group Rio Tinto said this week that any sanctions on Rusal would cause “pretty significant disruption” to the global aluminum market, while acknowledging that his company stands to gain from higher prices.

Sanctions on Russia have already drastically altered global trade flows. Even though China has dramatically stepped up alumina exports to Russia, its overall exports to its giant north neighbor have cratered since the war. The same goes for exports to Russia from countries including Taiwan, South Korea, Japan, Germany, and Switzerland, as the analyst Matt Klein noted recently in his newsletter, The Overshoot.

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.