China’s Increased Use of Aluminium Beverage Cans to Fuel Demand Growth: Rio Tinto’s Barrios

China’s Increased Use of Aluminium Beverage Cans to Fuel Demand Growth: Rio Tinto’s Barrios

The second-biggest metals miner on Earth expects demand for aluminium to continue its upward arc, and much of the fuel propelling it will come in the form of aluminium beverage cans produced in the Middle Kingdom.

CEO of Rio Tinto Group’s aluminium unit Alf Barrios told Bloomberg in an interview yesterday that the increased adoption of aluminium cans by beer and soft drink producers in the People’s Republic of China is expected to be a significant driver in aluminium demand in the coming years.

“In the packaging sector, especially around soft drinks and beer in China, we’re seeing a shift from glass to aluminum,” he explained.

Rio Tinto expects to see a 4-percent uptick in aluminium demand each year for the next five years thanks to other factors as well, including an increase in vehicle lightweighting. That number may be conservative, however, as Barrios indicated that it does not factor in the increasing popularity of electric vehicles, as they typically require more aluminium than standard combustion-engine vehicles.

The firm, which reaps over a quarter of its overall revenue from the metal, anticipates global consumption of refined aluminium to grow in the near term as well, forecasting growth rates of between 3 and 4 percent for the next two years. Citigroup Inc. analysts view China’s production cuts as “as a long-term game changer” that will lead to a rise in prices which will, in turn, encourage increased capacity in other areas of the world.

According to Barrios, Beijing’s cuts mean “the rest of the world, where demand is also growing, will have to supply itself with aluminum in future.”

“Until now, the thinking was that China would be a net exporter, and all that growth would come from China, that’s where the change is, that view is now different,” he concluded.