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News & Press: Industry News

OECD Report: Excess Global Aluminum Capacity a 'Genuine Concern'

Tuesday, January 8, 2019  
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According to a new report released by the Organization for Economic Cooperation and Development (OECD), "non-market forces, and government support in particular, appear to explain some of the recent increases in aluminum-smelting capacity."

The researchers noted unprecedented output in the aluminum industry has fuelled concerns about excess capacity in the sector that is depressing global aluminum prices and threatening the viability of producers worldwide.

Government support was found to be common throughout the aluminum supply chain; however, it was found to be especially heavy in China and countries of the Gulf Cooperation Council, which includes Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman.

The report looked at 17 of the largest companies operating in the aluminum value chain, representing more than half of global smelting capacity. Researchers found these companies received up to $70 billion in total government support throughout 2013-2017.

The vast majority of financial support was provided by China's state-owned banks to Chinese aluminum state-owned enterprises, however, two private firms also benefited from SOE bank support, China Hongqiao, the world's largest producer of primary aluminum, and China Zhongwang, China's largest producer of extrusion products, the OECD found.

"Looking across the whole value chain also shows subsidies upstream to confer significant support to downstream activities, such as the production of semi-fabricated products of aluminum," the report states.

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