In the previous part, we noted that China’s steel exports rose in January. While China’s steel exports have been in a downtrend after hitting a record high in 2015, the country’s aluminum exports have continued to rise despite its stated policy of cutting excess capacity.
Last month, China exported 552,000 metric tons of unwrought aluminum—a rise of 25.5% year-over-year. China’s aluminum exports made a fresh monthly record in January. China exported 5.8 million metric tons of unwrought aluminum in 2018, which is 20.8% higher compared to the levels in 2017. Aluminum producers including Alcoa (AA) and Century Aluminum (CENX) blame higher Chinese exports for depressing global aluminum prices. China’s aluminum exports rose last year even though several smelters were reportedly losing money amid the spike in alumina prices (AWC).
Level playing field
Earlier this month, Roy Harvey, Alcoa’s CEO, lashed out against China’s overcapacity. He said that the “playing field simply isn’t level.” Harvey said, “One of my main jobs personally is to try to rally the forces of those countries, and those governments and those industry associations that do play by the rules, to recognize the problem, and to take actions that start to bring a market back into better balance.”
US sanctions on RUSAL also helped lift Chinese aluminum exports last year. Even though the US has lifted the sanctions on RUSAL, there hasn’t been a decrease in Chinese aluminum exports. Higher Chinese aluminum exports will likely increase the challenges for companies like Alcoa amid a global demand growth slowdown.
Read March Deadline Could Be Relaxed for ‘Biggest Deal Ever Made’ to learn more about the US-China trade talks.