China is currently the biggest producer and consumer of aluminium in the world and has expanded its aluminium industry considerably over the past 11 years, says metals trading company Metal & Tool Trade (MTT) board chairperson Volker Schütte.
Having produced 7.8-million tons of primary aluminium in 2005, China is set to produce almost 30-million tons this year. Schütte states that major aluminium producers of the past, such as the US, Canada and Russia, have actually reduced their production volumes over the same 11-year period.
Although South Africa’s aluminium production – less than 1.5% of the global production tonnage – is of little significance to the global aluminium market, local primary aluminium production has also been decreasing steadily over the past few years, he highlights.
“With a number of Chinese aluminium rolling and extrusion mills each having production capacity of one- to two-million tons of semi-finished product a year, Chinese producers have established a clear global price leadership in most products. The quality . . . is also in line with international requirements, often even setting new high standards,” Schütte explains.
Having observed the continued large-scale investments in the aluminium industry in China, he believes that this trend will continue.
Based on MTT’s observations of these important developments over recent years, the company has ramped up plans to develop close and reliable partnerships with some of the leading producers of rolled and extruded products in China.
Schütte states that having established an office in Shanghai in 2008, which operates mainly as a buying office, has helped MTT to establish such partnerships with several producers in India, China and the rest of Asia. He suggests that this has also enabled the company to provide its South African customers with an unmatched international network of high-quality suppliers.
He notes that growth in the local aluminium- intensive industries is not far away, as more aluminium products are being imported into South Africa at internationally competitive prices.
Schütte believes that the local rolled-aluminium producer will have to refocus on offering a more limited range of products, such as can strip and automotive-related products, to stay competitive having taken their limited capacity into consideration.
“This also applies to the extrusion companies operating in South Africa, which are facing strong international competition from wide-ranging imports,” he concludes.