This polarity of global aluminum production is nothing new. Only an accelerating outflow of semi-manufactured products, some of which challenge the definition of what is a “product”, is preventing things from getting even worse. The Shanghai aluminum price is accordingly bombed out to the point that at least half of the country’s total operating capacity is running at a loss, according to some estimates. The Chinese aluminum smelter sector remains profoundly ill-disciplined with older zombie smelters kept alive by local governments and new capacity still coming on stream. These still weigh heavily over the aluminum price in the form of millions of tonnes of accumulated surplus. Such enlightenment has taken several years to achieve and marks only the very first step toward correcting the mistakes of the past.
The one hand clapping is that of the non-China world, where producer discipline has tamed supply sufficiently to drag the market into a state of deficit. It’s supposed to be a question without an answer, a test posed by the master to the disciple in the Zen journey toward enlightenment.īut it’s also as good a description as any of the current state of global aluminum production. A man arranges metal tubes that are part of a Sobia, a diesel heater, prior to winter season in Sidon, south Lebanon October 25, 2014.
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