During Aluminum Week 2016, hosted by the China Nonferrous Metals Industry Association (CNIA) in Nanning City, Guangxi, China on October 26, Heidi Brock, president and CEO of the Aluminum Association, addressed delegates with a call for action on global aluminum overcapacity. In her opening session remarks, Brock states,
Aluminum is experiencing a once-in-a-generation expansion in realized and projected demand growth. Customers and consumers worldwide are increasingly turning to engineered aluminum solutions to make good products great, and great products even better. This includes everything from more fuel efficient vehicles to sustainable packaging to greener buildings. All global aluminum producers should benefit from this growth, and we can do so if we move toward greater cooperation.
She explains that in order to bring this global opportunity to fruition, it’s necessary for producers to commit to common goals, including:
- Agree to play by the same set of rules on global trade.
- Encourage negotiations between our respective governments to address shared challenges.
- Increase transparency in the marketplace including shared language and definitions.
- Commit to the highest environmental standards including enforceable CO2 emissions targets.
Following these statement, Brock then addressed concerns regarding overcapacity and the challenges it has caused to the global primary aluminum industry, noting that “while primary aluminum production in the rest of the world has responded to market forces — staying flat or declining in recent years — Chinese production has continued to grow and now accounts for well over half the world’s output.”
This problem, she explains is not the result of free trade at work, but the result of “government policies and practices, especially subsidized electricity, financing, as well as potentially illegal trade behavior.” She further notes:
The entire U.S. industry is united in its belief that the current situation of subsidized overcapacity must be jointly addressed by the U.S. and Chinese, and other governments. And, while our downstream segment continues to perform reasonably well today, our member companies recognize that the issues impacting the upstream today can just as easily weaken the downstream tomorrow.
Brock showed appreciation for the CNIA and the organization sending a delegation to testify at the recent U.S. International Trade Commission hearing on competitive conditions affecting the U.S. aluminum industry. The Aluminum Association, she noted, is in agreement with the CNIA that a solution to the problem of overcapacity can be found through dialog and cooperation. The Aluminum Association was encouraged by recent news out of the China State Council banning new capacity for any industries facing serious oversupply — including aluminum. Brock called for a joint committee to convene to create greater transparency, to determine common definitions for describing the critical area of production and capacity, and to move toward a common understanding about what capacity cuts mean and how they should be enforced, as well as to create definitional data and tracking methods for CO2 emissions that are consistent.
In closing her presentation, Brock urged the forum to commit to global dialog, improved understanding, and production excellence, noting: “Now is the time to act. Now is the time for China to join the community of global aluminum producers committed to a sustainable future for this industry — with commitments that are evidenced through actions, as well as words.”