LONDON, July 28 (Reuters) – It’s all about China. This has been the mantra of the industrial metal markets for over a decade. The country’s industrialisation and urbanisation programmes have been the core driver of demand growth across the metallic spectrum.
In the case of aluminium, however, China’s influence on the global supply chain is double-edged. As well as being the biggest user of aluminium, China is by some margin the largest producer, accounting for over 50 percent of global output.
That dominant role is now in focus as Beijing launches what looks like a multi-pronged attack on its aluminium producers. Production cuts in regions around the capital have been mandated for the coming winter heating season, which starts in November.
Separately, what Beijing terms “illegal” capacity is being closed right now. Analysts have tracked some two million tonnes of “closures” with a broad consensus another four million tonnes is at immediate risk.
Throw in rolling environmental inspections and a requirement that all new capacity must be offset by the closure of older capacity and it does look as if Beijing is finally getting serious about reining in its aluminium sector. The rest of the world is watching closely. China’s exports of surplus aluminium in the form of semi-manufactured products have set it on a collision course with the Trump Administration.
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