July Materials Trade Data Weakened, Aluminum Exports Down 10% MoM
AI summary card
July Materials Trade Data Weakened, Aluminum Exports Down 10% MoM
China's July aluminum and steel exports, as well as copper and iron ore imports, all declined MoM, indicating marginal weakening in arbitrage conditions and downstream demand, while coal imports remained supported by the arbitrage window.
- Exports of aluminum products were 643,000 tonnes, up 19% YoY but down 10% MoM, as the strong export arbitrage support seen in June weakened.
- Steel exports were 10.10 million tonnes, up 3% YoY and down 2% MoM; cumulative exports in the first seven months of 2026 were 65.00 million tonnes, down 4% YoY.
- Imports of copper and copper products were 425,000 tonnes, down 11% both YoY and MoM, as end-user purchasing willingness weakened amid high copper prices.
- Iron ore imports were 108 million tonnes, up 3% YoY and down 4% MoM, as shrinking steel mill margins and maintenance suppressed demand.
- Coal imports were 43.00 million tonnes, up 20% YoY and broadly flat MoM, with the import arbitrage window still open.
Report interpretation
Overview
The report tracks China's July 2026 trade data for steel, iron ore, copper, aluminum, and coal. Overall, aluminum and steel exports declined MoM, while copper and iron ore imports also weakened MoM, reflecting marginal changes in export arbitrage, steel mill profitability, and downstream purchasing willingness; coal imports remained high, supported by relatively strong arbitrage profits.
Core views
Materials trade data were generally weak. Steel export statistics may have been affected by more products being classified as billets, but domestic steel production and apparent consumption still contracted significantly. The decline in copper imports was related to a lower frequency of import arbitrage opportunities and weaker consumer purchasing willingness after prices rose. Aluminum exports maintained rapid YoY growth but fell MoM, and Middle East smelting capacity may restart earlier than expected. Iron ore demand was affected by shrinking margins and equipment maintenance at Chinese steel mills. Coal is the relatively stronger variety, with previous orders and the continuously open import arbitrage window expected to support imports at a high level.
Analysis framework
The report uses monthly customs trade volumes as the core, comparing July data with the previous month and the same period last year, and explains volume fluctuations by incorporating high-frequency industry information, steel mill production and margins, import and export arbitrage, port premiums, international prices, and changes in overseas supply. The steel section further estimates national crude steel production trends and apparent consumption based on changes in daily output at member mills of the China Iron and Steel Association.
Methodology notes
Assess annual trends through YoY comparison and identify recent momentum through MoM comparison.
The report compares monthly import and export volumes of steel, iron ore, copper, aluminum, and coal on a YoY and MoM basis, and supplements cumulative 2026 data.
Estimate domestic apparent consumption based on changes in production, imports, and exports.
The report assumes that the YoY change in national crude steel output is similar to the daily output trend at member mills of the China Iron and Steel Association, and accordingly estimates that apparent steel consumption in July fell 8.7% YoY and 12.6% MoM.
Use domestic-overseas price spreads, import premiums, and arbitrage windows to assess trade drivers.
The copper analysis incorporates the Yangshan copper premium and the frequency of import arbitrage openings; the aluminum analysis incorporates London Metal Exchange prices and changes in export arbitrage; the coal analysis focuses on whether import arbitrage profits are sustained.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- AluminumExport momentum and changes in global supply
- Strengths
- July exports increased 19% YoY, and cumulative exports in 2026 increased 17% YoY.
- Weaknesses
- July exports fell 10% MoM, and the strong export arbitrage support seen in June weakened in early July.
- Comparison
- YoY growth remains strong, but MoM momentum has clearly weakened.
- Risks
- Changes in London Metal Exchange aluminum prices, earlier-than-expected restart of Middle East smelting capacity, and continued narrowing of export arbitrage.
- SteelExports, production, and domestic apparent consumption
- Strengths
- July exports increased 3% YoY, with monthly export volume still exceeding 10 million tonnes.
- Weaknesses
- Exports fell 2% MoM, cumulative exports in the first seven months fell 4% YoY, and estimated apparent consumption fell 8.7% YoY.
- Comparison
- Monthly YoY improved, but cumulative exports and domestic demand were weak.
- Risks
- Classification of billets and steel products may cause statistical discrepancies, while shrinking steel mill margins and maintenance may further depress production and demand.
- CopperImport demand, arbitrage, and global mine supply
- Strengths
- Imports of copper ore and concentrates increased 2% MoM, and global mine supply constraints provide some support for prices.
- Weaknesses
- Imports of copper and copper products fell 11% both YoY and MoM, and the Yangshan copper premium retreated from highs.
- Comparison
- Demand for refined copper and products was weak, while mine-end supply remained tight.
- Risks
- High prices suppressing purchases, fewer import arbitrage windows, and disruptions to global mine supply.
- Iron OreChinese steel mill demand
- Strengths
- July imports increased 3% YoY, and cumulative imports in 2026 increased 6% YoY.
- Weaknesses
- July imports fell 4% MoM, as steel mill margins contracted and equipment maintenance began.
- Comparison
- YoY and cumulative data still show growth, but recent demand momentum has weakened.
- Risks
- Further declines in steel production and margins, broader maintenance scope, and continued contraction in domestic apparent consumption.
- CoalImport arbitrage and domestic supply constraints
- Strengths
- July imports increased 20% YoY, cumulative imports in the first seven months increased 4% YoY, and the import arbitrage window remains open.
- Weaknesses
- July imports were broadly flat MoM, with limited incremental growth momentum.
- Comparison
- Compared with other materials categories, coal imports were more resilient.
- Risks
- Recovery in domestic supply, narrowing import price spreads, or fading effects from previous orders could cause imports to fall.
Key data
- July exports of aluminum products643,000 tonnesUp 19% YoY and down 10% MoM; cumulative exports in 2026 were 4.039 million tonnes, up 17% YoY.
- July steel exports10.10 million tonnesUp 3% YoY and down 2% MoM; cumulative exports in the first seven months of 2026 were 65.00 million tonnes, down 4% YoY.
- July apparent steel consumption estimateDown 8.7% YoYDown 12.6% MoM, based on estimating national crude steel output using the daily output trend at member steel mills.
- July imports of copper and copper products425,000 tonnesDown 11% both YoY and MoM.
- July Yangshan copper premium highUS$115/tonneFell to US$112/tonne at end-July and continued to decline in early August, indicating weaker purchasing willingness at high prices.
- July copper ore and concentrate importsUp 2% MoMDown 7% YoY and down 2% year-to-date, with global mine supply still constrained.
- July iron ore imports108 million tonnesUp 3% YoY and down 4% MoM.
- July coal imports43.00 million tonnesUp 20% YoY and broadly flat MoM; cumulative imports in the first seven months of 2026 were 268 million tonnes, up 4% YoY.
Impact & implications
The MoM weakening in trade volumes puts pressure on near-term demand and earnings expectations for the materials sector, especially the steel, iron ore, and copper chains. Aluminum exports still show strong YoY growth, but weaker arbitrage conditions and the restart of overseas capacity may limit subsequent export momentum. High coal imports help ease domestic supply constraints but may also increase competition from imported coal in the domestic market. Overall data are consistent with the Cautious view on the Greater China materials sector.
Risks
- Differences in the classification of billets and steel products may cause official steel export data to be lower than the level reflected by high-frequency data.
- Monthly trade data may be affected by shipment timing, previous orders, and seasonality, and single-month changes do not necessarily represent a sustained trend.
- Rapid changes in commodity prices and domestic-overseas price spreads may reverse arbitrage windows for copper, aluminum, and coal.
- Earlier-than-expected restart of Middle East aluminum smelting capacity may increase global supply pressure.
- Global copper mine supply constraints may exacerbate raw material tightness and push up prices, thereby further suppressing downstream purchases.
- Morgan Stanley has shareholding, investment banking, or other commercial relationships with some covered companies, which may create potential conflicts of interest.
What to watch
- Whether aluminum exports can stabilize in August, and whether export arbitrage conditions narrow further.
- The actual restart timing and scale of Middle East aluminum smelting capacity.
- Yangshan copper premium, copper import arbitrage windows, and end-user purchasing willingness in a high-price environment.
- Chinese steel mill margins, equipment maintenance, daily crude steel output, and changes in apparent steel consumption.
- The impact of billet and steel product export classification on actual steel export volume.
- Whether iron ore import volume and steel mill operating rates continue to diverge.
- Coal import arbitrage windows, domestic supply constraints, and the arrival pace of previous orders.