China maintains its surplus aluminium by making beer cans & foils

Aluminium factories located in China are using the metal more for making beer cans as well as cigarette packaging. They have maintained their surplus production for the eighth year although other producers like United Co. Rusal & Alcoa Inc. (AA) has cut down their output.

China’s total production will be 2.5 mn metric tonnes more than its requirement for the year 2014. Though the country manages to store the surplus production, a growth can be noticed in the shipments of the processed metals. According to Bloomberg survey done 10 analysts, the net surplus of global aluminium will be 160,000 tons.

Fabricators have to be given an incentive for unloading a supply. With high tariffs the exports remains unprofitable for the typical 55-pound blocks and more aluminium is turned into foil, sheets and plates which fetches rebates from the government. The total output of Chinese aluminium products have risen 25% in the moth of April since last year and exports in March were recorded the highest.

“Semi-finished fabrications will continue to grow this year, especially in capacity,” said Paul Adkins, the managing director of AZ China Ltd. in Beijing who has worked in the aluminum industry for three decades. “Factories are looking now for export opportunities.”

Aluminum output expansions in Xinjiang region in China and the Middle East are adding to surplus, Morgan Stanley says. The shipments of aluminum products in Asian countries, including sheet, foil and plate rose 10% in 2013 to 3.1 million tonnes, the most since 2004.