US steel and aluminium tariffs have led to a price-free, unprecedented aluminium. The rise in prices has been diluted further with sanctions against Russian Rusal, one of the world's largest aluminium producers. Only in April this year, the aluminium price has increased by 30 percent. In this situation where global demand for aluminium is already larger than supply, China's aluminium producers can earn the big-scale.
China already dominates the aluminium market with 57 percent of world output, compared with 47 percent just four years ago.
The country's aluminium industry is at the same time in the process of transformation. A significant part of production capacity has moved to less populated areas with cheaper energy sources or near bauxite deposits. At the same time, the aluminium industry is more efficient, both in terms of cost and productivity.
The state-owned dragons' grip on the market, especially Chalco, is increasing, partly to counteract private companies producing far-reaching global demand, as previously the case. It has also introduced a trading system, where companies can only expand if they buy production equivalents to prevent overproduction.
Source: Ecomine
