The Aluminum Association, the Aluminium Association of Canada, and European Aluminium issued an open letter in advance of the upcoming G-20 Summit 2017 to take place July 7-8 in Hamburg, Germany, calling for the creation of a Global Forum to address global aluminum overcapacity. This is the first time that a global coalition of aluminum producers have called for such an effort to address Chinese overcapacity in the marketplace.
The G-20 is an international forum, in which the governments and central bank governors from 20 major economies come together with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability. Collectively, the G20 economies account for around 85% of the gross world product (GWP), 80% of world trade, and two-thirds of the world population. (Source: Wikipedia.)
The full text of the associations’ letter is below.
At the upcoming G-20 Hamburg Summit in Germany, leaders will discuss challenges to global economic growth, stability and security, and digitization.
We are writing to urge G-20 leaders to provide a collective response to the aluminum sector by creating a Global Forum on aluminum excess capacity.
As organizations representing aluminum producers along the whole value chain in the United States, Europe, and Canada, we are writing to draw your attention to the global market imbalances in the aluminum industry, caused in particular by the enormous excess capacity in China. This situation not only significantly distorts international trade flows affecting all of our countries but also undermines global stability.
In 2000, China supplied 10% of the world’s primary aluminum. Today, Chinese manufacturers have increased their output by five, supplying 53% of all aluminum produced globally and spurring increasing overcapacity in the downstream aluminum sector. Additionally, by 2020 Chinese aluminum capacity is expected to grow by a further 24%.
China’s state-sponsored support is contributing to an unsustainable structural overcapacity that will impact growth and contribute to heightened instability until it is addressed. Both the massive increase in production and the excess capacity have had a downward effect on the prices, generating significant economic and employment losses for our respective producers and economies. This excess capacity threatens the competitiveness of both upstream and downstream aluminum producers.
Last year’s G-20 summit recognized that “excess capacity in steel and other industries is a global issue which requires collective responses”. Leaders also recognized that “subsidies and other types of support from government or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention”. The United States has already taken action to address the effect of subsidies on its aluminum industry. In January 2017, the US filed a request for consultation at the WTO concerning subsidized financing and feedstocks provided to primary aluminum producers in China.
The upcoming G-20 summit represents a critical opportunity to work collectively to re-establish fair trade conditions in the global aluminum industry. Last year the G-20 resulted in the creation of a Global Forum on steel excess capacity in order to increase information sharing and cooperation. Now is the time to recognize the excess capacity which negatively impacts the competitiveness of the global aluminum industry. We therefore urge G-20 leaders to provide a collective response to the aluminum sector by creating a Global Forum on aluminum excess capacity.
President & CEO, The Aluminum Association
Director-General, European Aluminium
President & CEO, The Aluminium Association of Canada