Chinese Overcapacity Makes for Tough Going on International Aluminium Market: EGA’s Kalban

Chinese Overcapacity Makes for Tough Going on International Aluminium Market: EGA’s Kalban

Significant competition from aluminium smelters in the People’s Republic of China will temper upward pressures on the global price of aluminium according to Emirates Global Aluminium chief executive Abdulla Kalban.

Although Kalban’s firm is among the top ten aluminium producers on Earth, EGA remains dependent upon sales to overseas buyers. As a result the firm faces competition from five other Chinese smelters. Overall, aluminium from China accounts for nearly sixty percent of the world’s production.

Kalban told local media that aluminium producers in the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) “are trying to mitigate the threat to market share but the Chinese are everywhere, in Europe, Asia, everywhere.”

“The oversupply position is mainly because of the Chinese [and for] primary aluminium production there is concern from our consumers because of severe competition from the Chinese, including into our local markets in the UAE,” he continued. “I don’t expect we’ll see good prices for the next couple of years and most companies are in pain.”

Kalban also explained that EGA is working towards vertical integration in order to lower overhead and increase competitiveness, pointing out the firm’s continuing construction of a new US$3 billion alumina refinery at Al Taweelah, Abu Dhabi.

According to the International Aluminium Institute, world production of the element was 4.9 million metric tons. China produced 2.8 million of those tons, while GCC member countries produced 426,000 metric tons, accounting for the second-largest regional total. Up to eighty percent of that tonnage must be sold abroad, said Mohammed Al Naki, the chairman of Arab International Aluminium Conference (Arabal).

“It is not only GCC producers suffering from China; Europe and others are suffering from China too,” explained Al Naki.

He went on to explain that, despite strong demand from the region’s construction and transportation sectors, areas such as automotive production must increase in order to continue bumping up aluminium demand in the region.