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Unraveling China's Dominance In Global Aluminium Market
3 months ago
Non Ferrous Scrap
Non Ferrous Scrap
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OfBusiness
OfBusiness

Unraveling China's Dominance In Global Aluminium Market

Summary
Explore China's paradoxical dominance in the global aluminium market. Despite regulatory caps, it contributed 69% of new global aluminium output in 2023. Uncover the dynamics shaping the metal's future.

China, a powerhouse in the global economic landscape, holds a pivotal role in the aluminium market. Not only is it the largest consumer of this versatile metal, but it also claims the throne as the world’s leading producer, contributing to nearly 60% of the global output.

Growth & Challenges: 2002-2014

Between 2002 and 2014, China showcased its industrial prowess by establishing a staggering 80% of new global smelting capacities. However, this meteoric rise was not without its challenges. The surge in Chinese aluminium exports triggered a wave of anti-dumping duties from various nations. Accusations of over-capacity creation and the flooding of foreign markets with low-cost metal prompted a slowdown in capacity expansion.

Regulatory Shifts: A Double-Edged Sword

In response to global concerns and to align with environmental goals, China embarked on a path of regulatory adjustments. Zero-emission targets led to mandated capacity cutbacks and the closure of smaller, environmentally hazardous smelters. In 2016, a significant move was announced, capping China’s nameplate capacity at 45 million metric tons per annum (MTPA), with a focus on modernization and capacity swapping.

2014-2023 Insights

Contrary to concerns about stalling global aluminium output growth, recent data presents a paradoxical narrative. From 2014 to 2023, a staggering 84% of the incremental change in global aluminium production emanated from China. In the year 2023 alone, nearly 69% of the world’s new aluminium output emerged from Chinese smelters, underscoring the country’s steadfast commitment to shouldering the bulk of the global metal production increase.

Global Green Initiatives Vs. Chinese Aluminium Production

While global green energy initiatives have prompted a near stall in new aluminium capacity additions worldwide, China stands as a notable exception. The relentless growth of smelters within its borders suggests that, as long as domestic demand for aluminium remains positive, China is poised to continue expanding its production capacity. The recent slowdown in its property market boom has not diminished the significance of China in the global aluminium landscape. 

Market Outlook

As the year unfolds, the question of whether China’s aluminium production will breach the 45 million ton cap looms large. If SMM’s predictions hold true, China’s installed capacity could surge to 47 or even 48 million tons by year-end. This defiance of the announced cap underscores China’s resilience in the face of regulatory constraints. 

OFB’s Insight

Despite challenges and regulatory interventions, China remains an undeniable force in the global aluminium market. Its dominance in production, coupled with a strategic approach to regulatory challenges, positions the country as a key player in shaping the future of the aluminium industry.

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