Chinese aluminum overproduction and market displacement

Russia, being eight billion square miles, has got a lot of coal. China has a tremendous amount. If you look at aluminum production in the world in recent years, you'll see China has increased by two and a half times in six years. The price of aluminum has dropped dramatically. And this is my take on this: China is overproducing aluminum as a means of exporting coal. When the former Soviet Union first started to open up in the early 1990s, they started dumping aluminum on the world market, and it just destroyed the profitability of Alcoa and Alcan and all the other aluminum producers around the world, because they dropped their price by a factor of three. That's because they were producing their aluminum in Siberia where they had lots of energy, and they were producing it for their own use. When they joined the world economy, they wanted to get capital, and the only way to get capital — because they didn't have the pipelines to get the oil and gas to market — they would produce aluminum and ship the aluminum. It's canned electricity. The Chinese right now are doing the same thing. It's their way of exporting all their coal. We're having another shock to the aluminum market. Other producers that are using hydroelectric power are going by the wayside because they just can't afford to compete with the Chinese dumping their aluminum on the world market, because that's the way they're going to get their capital. Okay. Tomorrow Dr. Belmar will be here. I'll be at jury duty unless I get excused.

Tom redirects to China's 250% aluminum capacity increase over six years. Framed as China selling aluminum cheap to export coal-derived energy, hurting global aluminum producers.

Other questions? Then we'll get back to what we're supposed to be talking about. We had talked about aluminum being canned electricity, and I mentioned last time that China has, in the last six years, increased their aluminum capacity by 250%. The rest of the world's not going up that fast. Some of this is because Ford is now making an F-150 out of aluminum, and people are saying we're going to start making aluminum automobiles, and we'll get to that in a little bit. But I have concluded that China has decided they don't mind being the country that creates all the pollution and essentially is killing their own citizens. They have lots of coal, and the way they're going to export it is by selling aluminum dirt cheap on the world market, which is hurting a lot of the aluminum companies right now.