Investing.com - Financial Markets Worldwide
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Shocker: China Not to Blame For Global Aluminum Glut

ByMetalMiner
Published 05/07/2013, 02:46 AM
Updated 07/09/2023, 06:31 AM
TTEF
-

We are going to get a little controversial here: it could be argued that Russia, and not China is the cause of global oversupply in the aluminum market.

The pace of new smelter construction in China has been breathtaking. It is fair to say that at no time in the history of the industry has so much capacity been added so quickly anywhere in the world.

Far from abating, as Chinese GDP growth has slowed and aluminum inventories around the world grow, new capacity continues to be added in China at the time of writing. HSBC estimates a further 12.7 million tons could be added by 2016, as the Chinese aluminum industry seeks to monetize low-cost coal reserves in the northwest.
China Rest Of World
Expected rationalization of higher-cost production capacity in currently dominant Henan and other coastal states has not happened because of state support for local champions, adding to the oversupply situation and depressing utilization rates.

But China has been largely a closed market for aluminum, as this graph also from HSBC illustrates.
Import & Exports

With export tax arrangements creating a disincentive to export primary metal, the only Chinese aluminum affecting the world market is downstream semi-finished rolled and extruded products, representing a relatively small fraction of the total 20 million tons produced annually. Net exports are running at about 1% of total production, or 200,000 tons, according to the bank’s graph.

The eastern bloc, on the other hand, is producing far in excess of what it can consume domestically, as this graph illustrates:
World Aluminium
by Stuart Burns

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.