Aluminum Trade Associations Release Roadmap to Tackle Global Overcapacity

SEATTLE (Scrap Monster): The leaders of national aluminum associations from Canada, the U.S., Europe and Japan held discussions with representatives from G7 member countries in Montreal to discuss ways to address global aluminum overcapacity. The summit urged the G7 leaders to make formal request to G20 in creating a global multilateral and governmental forum on aluminum overcapacity.

The participants at the summit defined a roadmap to sustainable global aluminum market, which identified China as the leader in aluminum production. The aluminum primary smelting overcapacity in China is expected to report 30% year-on-year growth in 2018. This represents an additional capacity of nearly 3.3 million tons in a single year. The total Chinese capacity is expected to reach 49 million tons, accounting for 54% of the global capacity. The capacity is projected to touch 52 million tons by 2020.

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The actions taken by different countries across the world to address the overcapacity issue have had only limited impact. For instance, the recent curtailments due to environmental concerns had no material impact, as they were outweighed by new capacities coming online. The private companies continued to receive direct and indirect support from provincial governments. Estimates suggest that approximately 13 million tons of excess Chinese aluminum capacity sits idle, waiting for restart.

The Montreal Summit noted that only multilateral institutional and governmental approach could solve the issue. It recommends developing a governmental system for international monitoring of information related to overcapacities. The support measures by various governments must be monitored and key policy measures must be rolled out in order to ensure a global level-playing field.