China secondary aluminium industry dynamics improve due to supply-side reforms

In a recent report published by the China Non-ferrous Metals Industry Association (CNIA), China’s aluminium scrap recycling industry is benefitting from the recent supply side reforms, wide-scale economic restructuring and increased domestic demand.

Secondary aluminium output in China reached 6.3 million tonnes in 2016.  In the first half of 2017, the volume is estimated to reach 3.35 million tonnes. During the recent environmental protection checks, many small-scale aluminium recyclers came under the scanner of the Chinese provincial governments. They were either allowed to operate with scaled down capacity or were forced to shut down.

These closures led to reining in of the excess supply of secondary aluminium in the domestic market resulting in correction of the price dynamics.

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CNIA data shows that profits of the secondary aluminium producers have improved due to falling aluminium scrap prices and rising secondary aluminium alloy prices in H1 2017.

Many large-scale aluminium recyclers are currently running at full capacity, CNIA reported.