LONDON – There was a time when the global aluminum market could be seen as two parallel universes, to borrow a phrase coined by Klaus Kleinfeld, chairman and chief executive of Alcoa.
There was China. And there was the rest of the world. The great dividing wall was China’s 15 percent export tax, effectively preventing the flow of primary metal out of what was already the world’s biggest volume producer.
There was always an element of wishful thinking in Kleinfeld’s parallel vision, ignoring as it did the flow of semi-manufactured aluminum products out of China. But in terms of physical and paper trading of commodity-grade aluminum, the analogy just about held, until only a few years ago.
Alcoa has since divided itself into two separately listed companies but the two parts of the global aluminum market have moved ever closer. The physical export flow of “semis” has steadily increased with over four million tonnes leaving China in both 2015 and 2016.
And, equally significantly, the two main trading venues of London and Shanghai have started to connect, with the eastern universe exerting increasing influence over the western.
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