China, US Agree over Aluminum Capacity Cuts at G20 Summit

SHANGHAI, Sep. 7 (SMM) – China and the US have reached a consensus at the G20 Summit to join hands in combating global aluminum overcapacity, yicai.com reported.

Both sides have realized that subsidies by governments or government-backed institutions and other forms of support could distort aluminum market and exacerbate global overcapacity.

Aluminum smelters in China are concentrated in regions with rich power and bauxite. Some local governments encourage development of aluminum industry in a bid to boost local GDP and employment. 

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Since 2010, over 90% of the increase in China’s aluminum capacity has been contributed by western regions, such as Qinghai, Xinjiang, Inner Mongolia, etc., where electricity is relatively cheap, Zhang Zhenyu, member of the National Committee of Chinese People's Political Consultative Conference (CPPCC) said. 

Chinese aluminum industry is suffering from structural overcapacity, namely surplus of low-end capacity and lack of high-end capacity, Hu Chi, a researcher at State-owned Assets Supervision and Administration Commission of the State Council (SASAC), pointed out. 

Hu suggested that China should strengthen trade with the US while transferring low-end aluminum capacity to Southeast Asia, such as Vietnam and Cambodia. 

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China still relies on imports for high-strength aluminum semis used in aerospace sector.

Many domestic aluminum companies are spending great R&D efforts in high-end aluminum semis. For example, Nanshan Aluminum Co., who has begun R&D in automotive and aerospace aluminum sheet since 2012, now has an annual capacity of 150,000 tonnes of automotive aluminum sheet and 50,000 tonnes of aerospace aluminum sheet. China Zhongwang Holdings Group initiated 7075 aerospace extruded aluminum R&D project in 2013.

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