Illegal capacity and pollution: two threats facing the Chinese aluminium industry
Close on the heels of coal and steel, the aluminium industry is increasingly coming under pressure to moderate capacity growth. Implementing rules related to output cuts, capacity closures and new project permits will be fraught with disagreements between companies intent on protecting their profits and the government's iron will to regulate the industry. While the output cuts in 2017 have so far been modest, the determination of the Chinese government to deliver supply-side reform is undiminished. Beijing's efforts to rein in overcapacity and limit environmental damage heralds the emergence of a new dynamic for the Chinese smelting industry. This new dynamic indicates a reassessment of the trade-off between growth and grime. At a global level, this will also increase the likelihood of a tighter market balance and higher prices moving forward.