Aluminum Can Come Back Greener and Stronger

[...]Chinese players captured an even greater share of industry rent (the space between market prices and the supply curve) for smelting—their share rose from less than 30% in 2009 to more than 60% in 2019, while the rent captured by non-Chinese producers declined by more than half. The developments...

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Bibliographic Details
Published inBCG Insights
Main Authors Berle, Øyvind, Bhatia, Abhishek, Lee, Janice, Simon-Pierre, Monette, Valluru, Karthik, Konrad von Szczepanski
Format Web Resource
LanguageEnglish
Published Boston Boston Consulting Group Boston, MA 05.03.2021
Subjects
Aluminum
Carbon
Coal
Competition
Coronaviruses
Costs
COVID-19
Environmental tax
Metallurgy
Profitability
Steel production
Stockholders
Taxation
Taxes
United States > US
China
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Summary:[...]Chinese players captured an even greater share of industry rent (the space between market prices and the supply curve) for smelting—their share rose from less than 30% in 2009 to more than 60% in 2019, while the rent captured by non-Chinese producers declined by more than half. The developments poised to change aluminum’s competitive landscape are: 1) a growing focus among investors, customers, governments, and society on sustainability; 2) the strong likelihood of the near-term introduction of a carbon-taxation scheme by European governments—and, possibly, the US government; and 3) a set of changes in global trade patterns now accelerating in response COVID-19. 1. Coal-based production, which makes up 90% of Chinese production, currently accounts for 62% of global production and has led the industry’s supply growth over the last two decades. While the transition to cleaner power places no technical demands on the smelting process itself, producers that make the transition face the same hurdles, including limited access to clean power and potentially higher costs, as those from other industries that are shifting to cleaner power generation.