While the growth rate of aluminium use in China has fallen sharply since 2011, the country is expecting increased growth in the fields of transpor- tation, packaging and electricity over the next five years.

“Daily output has slowed down and shutting down capacity has been rising quarter by quarter,” commented China Non-Ferrous Metals Industry Association (CNIA) analyst Mo Xinda at the recent Aluminium Federation of South Africa’s (AFSA’s) International Aluminium Conference, in Cape Town.

“Finished projects that have been postponed tend to keep waiting and may eventually be closed,” she told conference delegates, adding that the industry was adapting to China’s “new normal”, which indicated that the economy was gearing down from “high speed to medium speed”.

“We are trying to make the supply more effective in meeting demand [by] cutting overcapacity, destocking, lowering cost and deleveraging,” said Xinda, adding that t

he focus of China’s aluminium consumption had shifted from the construction industry to transportation. This was largely in support of government’s raft of growth-support measures that were in favour of consumption, she explained.

Construction accounted for 33.6% of China’s total aluminium consumption – down 12% since 2011 – while aluminium used for electricity purposes made up 11.6% of the overall aluminium pie in China.

The use of aluminium in China’s transport sector, however, had increased and now made up a fifth of the country’s overall aluminium use. Seeing tremendous opportunity in the transportation sector, Xinda expected this number to rise by more than 10% over the next five years.

She noted that China would invest Rmb800-billion in railway construction this year, boosting the need for aluminium.

She further noted that more than 21-million passenger vehicles were produced in China in 2015, in addition to 3.4-million commercial vehicles, and that there was “good space” to add to the market.

Aluminium would be increasingly used in vehicles, with plans for the nonferrous metal to be widely used in trailers, tankers, coal wagons and new energy city buses. China is strongly promoting new energy with “great subsidies”, said Xinda.

“Our new energy buses are made of aluminium and we want to extend the range. We’re also looking at autobody sheets and using aluminium for seawater desalinisation.”

Meanwhile, Xinda expected the growth rate of the construction of traditional products like aluminium windows and doors to slow down, though there was promise in the use of aluminium for factory roofs. Other possibilities were replacing wood pallets with aluminium, as well as the use of aluminium in bridges.

She added that, while the price of aluminium was affected by fundamentals and financial attributes, “irrational market speculation” had been the main factor behind mispricing.

Xinda said most of China’s aluminium was consumed in the Chinese domestic market, with net exports accounting for only 6% of its output. The US, however, had complained that Chinese exports were hurting the oversupplied US market. China was accused at the con- ference of relabelling products to circumvent antidumping duties in the US.