Tough year ahead for aluminum; China is the problem: Canadian Aluminum Association
Tuesday, January 28, 2020
According to Aluminum Association of Canada president and CEO Jean Simard, the aluminum industry is in for a bumpy ride in 2020. Speaking at a function hosted by the Kitimat Chamber of Commerce on Friday, January 17, Simard said the global overproduction of the metal, coupled with a general economic slowdown around the world, and the likelihood of recessions would further impact the export of Canadian aluminum.
“We are at the end of a very long, probably the longest manufacturing cycle in our history. We had ten years of constant growth and demand in our economy,” said Simard. “There is still growth in demand but it’s not at the same pace as it has been in the past ten years.”
He said the ‘elephant in the room’ was the rampant production of aluminum by China.
“They produce 57 percent of all the aluminum produced in the world. In the past 20 years, China has produced 260 million tons of aluminum, whereas North America over the last 100 years has only produced 240 million tons.”
He said to put Chinese production into context, the country currently produces ten times more than India, the world’s second-largest producer of aluminum.
“They produce faster and keep adding capacity. It’s an unruly market not dictated by normal market behavior.”
Simard added that the situation was worsened by state-sponsored production, larger players and the increased shipping of finished and semi-finished products onto the world market, factors which are eroding Canada’s market share of especially the American market.
“China over-subsidizes aluminum production in that country by three to eight times. One company alone benefited from $35 billion in state subsidies,” said Simard.