US aluminum producers concerned over China’s output

Tensions continue to mount among US producers of aluminum over the rise of imports from China. Despite weak commodity demand, Chinese producers continue to feed the production glut. As a consequence, aluminium prices are at their lowest levels in six years. Recently, Aluminium Corporation of China announced its plans to not shutdown a smelter, after it was able to secure a deal for lower electricity prices from the local government.

It is apparent that Chinese production will not be hindered by low production prices, any time soon. US producers blame China for low prices. They contend that the continuous increase in aluminium supply is the primary driver behind depressed prices. Century Aluminum Co. has tried to reduce supply through cuts in its production, however Chinese counterparts continue to flood the global markets with ever more production. Century Aluminum announced last week that it may let go of one out of its pot line in Kentucky which is one among a trio held by it.

On November 2, Alcoa Inc. announced its plans to curtail smelting capacity which caused an uproar in Massena Town over job losses and a resultant spill-over effect. The company will cut 503,000 metric tons of smelting capacity and 1.2 million metric tons of refining capacity.

In September, the US trade body filed a case with the Department of Commerce against aluminum producers in China. The trade body's plea accuses Chinese producers of avoidance of import duties on sales into the US. In response to this allegation, Chinese producers remain adamant that their actions are in accordance with government regulations and international trade rules. According to Morgan Stanley, China’s aluminum production will surge by 11% to 30 million tons, partly due to the unlimited support which the Chinese producers receive from their government.