Aluminum Association, Aluminium Association of Canada and European Aluminium release joint letter

The Aluminum Association has released a joint letter along with the Aluminium Association of Canada and European Aluminium prior to the upcoming G-20 summit requesting the formation of a Global Forum to address global aluminium overcapacity. At the upcoming G-20 Hamburg Summit in Germany, global leaders will discuss challenges to global economic growth, stability and security, and digitization.

A series of discussions and arguments has taken place over the year culminating in the formation of a coalition to fight against over capacity and to facilitate fair competition among global producers.   This is the first time that a global coalition of aluminium producers has taken up a step to address global Chinese overcapacity.

The content of the letter makes an effort to draw attention to the global market imbalances in the aluminium industry, caused in particular by the enormous excess capacity in China. The signatories believe the situation distorts international trade flows affecting all the countries undermining global stability. 

The signatories draw attention to the fact that Chinese manufacturers have increased their output enormously supplying 53% of global aluminium production spurring increasing overcapacity in the downstream aluminium sector. They fear Chinese aluminum capacity is expected to grow by a further 24% by 2020.

They also draw attention to China’s state subsidies which is contributing to an unsustainable structural overcapacity. They believe, increasing production and the excess capacity have had a downward effect on the prices, causing losses of financial and job losses for other competing producers and economies. This excess capacity threatens the competitiveness of both upstream and downstream aluminium producers.

Last year’s G-20 summit agreed upon the fact 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”.

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In January 2017, the US filed a request for consultation at the WTO concerning subsidized financing and feedstocks provided to primary aluminium producers in China.

The upcoming G-20 summit can open up a new prospect for countries to work collectively to re-establish fair trade conditions in the global aluminium industry. The signatories feel it is the right time to recognize the negative impacts of the excess capacity on the competitiveness of the global aluminium industry and there urge G-20 leaders through their letter to respond positively to the aluminium sector by creating a Global Forum on excess aluminium capacity.