China set to offload more aluminium onto global market

Amid accusations made by the US trade associations and other market bodies that China might be violating international trade regulations and fair competition norms, the world’s largest aluminium producing country is yet again set to unleash fresh loads of aluminium onto the global market.

This comes in the wake of the Chinese government offering lower power tariffs to the country’s dying smelters in an effort buoy the slowing economy. Electricity being the single most crucial factor in aluminium smelter operation is expected to lower the cost of production significantly thereby helping the producers to stay economically viable in the short to medium term.

China is already producing excess aluminium and offloading it onto the world markets. This breather from the country’s top authorities will further encourage Chinese smelters to manufacture the metal in excess quantity which they would then eventually ship to the foreign countries leading to worsening of the glut scenario that is already plaguing the global aluminium industry.

In the first 9 months of the year, China exported a record 3.1 million tonnes of semi-manufactured aluminium products, despite a dip in the third quarter when a six-year low global prices made exporting less attractive.

"As the price differential becomes attractive for exports, it's that much easier to hit the 'go' button and start exporting again," said an analyst based in China, noting recent falls in local prices would reinvigorate Chinese exports.

Chinese aluminium prices have hit successive record lows for most of October, and are down more than 20 percent this year approaching 10,000 yuan ($1,578) a tonne. On the contrary, global aluminium prices are presently hovering around $1,475 a tonne.

The surge in shipments is already triggering calls for action to stem the flow in some countries. Illustrating growing export tensions, the U.S. extruders’ council last week referred China's second-biggest aluminium extruder to U.S. regulators after accusing it of evading import duties. China Zhongwang Holdings Ltd denied the accusation.

World’s top producer RUSAL has also petitioned for the issue to be brought in front of the world's top customs body.