COLUMN-China ratchets up the pressure on its aluminium producers – by Andy Home (Reuters U.S. – April 21, 2017)

Is aluminium the new steel for China’s policy-makers? The country’s steel producers are already being subjected to a host of measures intended to weed out excess capacity. A wholesale restructuring of the enormous steel sector is a key component of the country’s declared war on pollution.

It also provides some negotiating leeway for China when it comes to dealing with the growing international pressure to rein in exports. China’s aluminium producers, which like their steel counterparts now dominate global supply, seem to be next in line for “supply-side reform”.

Threats to close capacity in the region around Beijing over the winter heating months had already propelled aluminium prices higher. They have just been given a further boost by news that Beijing has ordered the suspension of new capacity in the northwestern province of Xinjiang. Further measures seem certain to follow.

The country’s aluminium output growth is already showing signs of braking sharply, although, as ever, statistical confusion may simply be adding to the general confusion as to what Beijing’s real aluminium policy goals are.

Beijing’s plan to force capacity reductions in the area around the capital city next winter had already lit a fire underneath the aluminium price. Sceptics argue that the size of the likely cuts will be dwarfed by the continuing roll-out of new capacity, particularly in the far-flung northwestern province of Xinjiang.

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