Singapore 08/09/2016 - The US and China have agreed to work together to address the global electrolytic aluminium excess capacity, according a statement from the White House following talks at the G20 Summit in Hangzhou, China.
China’s exports of aluminium products boosted by rising domestic aluminium production capacity have been the subject of contention particularly in the US, where domestic producers have accused China of unfair trade prices in the aluminium market.
“The United States and China recognise that due to a weak global economic recovery and depressed market demand, the excess capacity of the electrolytic aluminium industry has increased and become a global issue requiring collective response,” the September 4 statement said.
“Both countries are to work together to address the global electrolytic aluminium excess capacity.”
The US also said it welcomes China’s supply-side structural reform program, which has cutting excess capacity as one of its key objectives. No further details were.
Beijing itself has flagged the overcapacity in the Chinese aluminium industry and had recently introduced guidelines for the industry which includes controlling new capacity and phasing out uncompetitive and excess capacity.
New aluminium smelting projects will no longer be approved by the Chinese government though those that were previously approved but yet to be built or commissioned are still expected to add to the smelting capacity in the country, sources said.
In the first half of this year, Chinese installed aluminium capacity rose 1.5 million tonnes per year to 40.1 million tonnes - around 1.8 million tonnes per year of operating capacity was commissioned and about one million tonnes per year of capacity resumed over the same period, UC Rusal estimated in a report last month.
China had cut close to five million tonnes per year of aluminium production capacity last year due to falling aluminium prices, but some of these capacities have been restarted this year after aluminium prices rebounded.
Till the end of the year, another 500,000 tonnes per year of capacity could be restarted and a further 1.5 million tonnes per year of new capacity could be commissioned, according to Shanghai Metals Market (SMM).
The restarts have translated to rising aluminium exports – mainly in the form of semis – in recent months.
China’s unwrought aluminium and aluminium product exports had increased 5.1 percent month-on-month to 410,000 tonnes in August, making it the second straight month of increase on a month-on-month basis.
China currently has a 15-percent duty on the export of primary aluminium but shipments of semi-finished and finished metal are tax-free. The country offers a refund of value-added tax (VAT) on exports of some products, reducing the cost and making it more competitive in foreign markets.