EGA Chief says rising competition from China will keep aluminium prices subdued

With China zooming ahead in world aluminium, spurring fierce competition amongst dominant players, prices of the light metal are unlikely to rise in the next couple of years, said Emirates Global Aluminium chief executive Abdulla Kalban.

EGA, one of the world's top ten aluminium producers, is already feeling the heat as it is heavily reliant of the exports market which also has five of the world' top producers  from in it China and they altogether account for almost 60 per cent of the world's total aluminium production.

"The oversupply position is mainly because of the Chinese [and for] primary aluminium production there is concern from our consumers because of severe competition from the Chinese, including into our local markets in the UAE. I don’t expect we’ll see good prices for the next couple of years and most companies are in pain," said Mr. Kalban.



Aluminium prices have been experiencing severe volatility in the past few months. After recovering modestly from the lows at the beginning of the year, the metal prices dropped to a two-month low recently, owing to oversupply. The demand growth has also slowed down but then Chinese smelters are simply not reining in their production. Restarts are the order of the day, and with heavy government subsidies situation is turning critical by the day.  

According to the latest data released by the International Aluminium Institute, world production of aluminium last month was 4.9 million tonnes, of which China alone produced at least 2.8 million tonnes. The next biggest contributor to global aluminium output was the GCC. The region produced 426,000 tonnes of the metal, up 70 to 80 per cent of which a substantial volume will be shipped off in the international markets, said Mohammed Al Naki, the chairman of Arab International Aluminium Conference (Arabal).

"It is not only GCC producers suffering from China; Europe and others are suffering from China too," said Mr Al Naki.

{googleAdsense}

Over the last few years, world aluminium industry has been following the consolidation route to buffer themselves against Chinese onslaughts. The mergers like Rio-Alcan, Emal-Dubal  were strategized keeping the rising competition in mind. Mr Kalban said EGA too is pursuing its own vertical integration strategy, with Al Taweelah alumina refinery in Abu Dhabi, due for completion in early 2018. The company also owns bauxite producer Guinea Alumina Corp and a 45 per cent stake in bauxite miner Cameroon Alumina.