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Aluminum excess capacity 'cyclical, not structural'

(Global Times)
Updated: 2016-10-26 09:54
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    Supply-side reforms, new growth points will address issue

    A leader from the China Nonferrous Metals Industry Association said a recent claim by the European Commission (EC) on China's aluminum overcapacity may be far-fetched.

    "I don't know on what grounds the EC put up that figure," said Wen Xianjun, vice chairman of the association, commenting on a EC communication that claims China has almost 10 million tons of excess aluminum capacity.

    On October 19, the EC, in a communication to the European Parliament and the European Council, called upon EU member states to support its efforts to provide the EU with more robust trade defense instruments.

    The communication described the impact on the EU of China's excess steel capacity, and it also said that overcapacity in other sectors was developing very fast.

    "For instance, China has almost 10 million tons of excess aluminum capacity, doubled from five years ago," the communication said.

    The EC communication said excess aluminum capacity is boosted by subsidized energy in China.

    "The overcapacity in the aluminum industry in China is a co-product of an economic slowdown and added capacity caused by previous investment in recent years," Wen told the Global Times at a press conference of the China Aluminum Week that kicked off in Nanning, capital of South China's Guangxi Zhuang Autonomous Region, on Tuesday.

    In the first nine months of the year, China exported 3.47 million tons of aluminum ingots and profiles worth 60.9 billion yuan ($8.99 billion), down 2.4 percent year-on-year by volume and 7.7 percent year-on-year by value, according to data from the General Administration of Customs.

    "Aluminum consumption peaked in the EU market at around 2006 while we believe that China's consumption peak will occur by the end of the 13th Five-Year Plan (2016-20) or the beginning of the 14th Five-Year Plan, at 44 million tons," Wen said, noting China's consumption of aluminum still has a long way to go.

    Wen said that China's aluminum overcapacity issue is "cyclical" and not structural.

    "To address the issue, we chose to carry out supply-side structural reforms, banning newly added capacity on the one hand and promoting new growth points that consume aluminum on the other," Wen noted.

    These new applications could include transportation, furniture, home improvements, construction and engineering, according to Wen.

 

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