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Global dialogue can resolve excess aluminum capacity
Innovation on consumption end is key to tackling issue: protectionism causes damage
Aluminum industry experts from China and around the world attending an international seminar on the metal said Wednesday that they believe dialogue and innovation can help address overcapacity in the sector.
China produces about half of the world's electrolytic aluminum, and its exports of aluminum have raised concern overseas.
During the G20 Summit in Hangzhou, capital of East China's Zhejiang Province, in September, China and the US reached a consensus to jointly tackle global aluminum overcapacity.
As capacity cuts have taken hold in the nation's coal and steel sectors, electrolytic aluminum and cement may be the next focus, Yicai Global reported in September.
In the first nine months of this 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.
"There is concern that aluminum is still coming out of China in the form of misclassified products or products that have been sent to third-party countries … and these are impacting the global markets," Heidi Brock, president and chief executive officer of the US-based The Aluminum Association, told the Global Times on the sidelines of the ongoing China Aluminum Week in Nanning, capital of South China's Guangxi Zhuang Autonomous Region, on Wednesday.
There have been several thousand job losses in the upstream segment of the industry in the US as aluminum smelters close due to market forces, Brock said.
The Chinese central government has paid much attention to overcapacity in aluminum production.
An executive meeting of the State Council, the nation's cabinet, chaired by Premier Li Ke-qiang on October 8, decided that no new capacity should be added in steel, coal, electrolytic aluminum and other industries with excess capacity.
"We want to see how [the decision] is implemented and enforced," Brock noted.
"There has been some foreign criticism and misunderstanding of China's aluminum industry, and we should use inter-company communication platforms to clarify facts, enhance common understanding and disperse misunderstanding," said Liu Danyang, deputy director of the Ministry of Commerce's trade remedy and investigation bureau.
A WTO dispute panel on October 19 ruled against several US anti-dumping measures, terming them a violation of WTO rules. Aluminum products were involved in this ruling.
Dialogue and cooperation are still preferred over protectionism, according to experts attending the industry event.
Ron Knapp, secretary-general of the International Aluminum Institute, said that economic and trade barriers are damaging to all and hold back growth and development.
"Protectionism does not resurrect past glories but instead has the potential to precipitate industrial decline in other parts of the value chain, by shifting burdens onto downstream sectors, which often employ more people and whose survival and prosperity depend on reliable, competitively priced material inputs, such as primary aluminum," Knapp said during a speech at the event.
"We are operating in a market, and markets are good at solving this type of issue, if we allow the markets to work," Knapp told the Global Times on Wednesday.
Sergey Goncharov, chief representative in China for UC Rusal, said it is necessary to rely on an innovative approach to solve the over-capacity issue.
He suggested Chinese investors think about putting money into plants that convert aluminum ingots into products in Russia's Krasnoyarsk "Aluminum Valley" special economic zone to bank on the area's existing ingot production, cost advantages and convenient logistics.
In this way, the ingots can be converted into products and absorbed into the Russian market, rather than having to be sold on world markets, including China, Goncharov told a press conference.
The "Aluminum Valley" project was discussed at the Shanghai Cooperation Organization economic forum last week.
Source: Global Times