LONDON (Reuters) – Western aluminium groups called on G7 leaders meeting next month in France to curb state subsidies that they regard as distorting global trade and fuelling overcapacity, they said on Thursday.
“We are calling on the G7 to take the lead for focused and decisive action … to begin the process of setting new, more effective rules on subsidies and SOEs (state-owned enterprises) to put an end to such distortive practices,” the groups said.
The statement by aluminium associations from the United States, Europe, Japan and Canada came ahead of a summit of the G7 group of rich nations in Biarritz, France on Aug. 24-26.
It cited a study http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/TC(2018)5/FINAL&docLanguage=En by the Organisation for Economic Cooperation and Development (OECD) this year that said 17 international aluminium companies received up to $70 billion (£56.11 billion) in state support during 2013-2017, with 85% of the support going to five Chinese firms.
China is the world’s biggest aluminium producer, accounting for 57% of global primary output of 64.3 million tonnes in 2018.
“Time is running short as aluminium producers are under stronger pressure than ever. What we need now is a solution that is designed for the aluminium sector to ensure a sound future for all stakeholders,” the statement said.
Benchmark aluminium prices on the London Metal Exchange <CMAL3> have shed 35% percent since touching a peak in May 2011 as the market grappled with overproduction and high inventories.
The G7 groups the United States, France, Britain, Japan, Germany, Italy, Canada and the European Union.
Some of the world’s biggest aluminium companies include Chinese firms Hongqiao <1378.HK> and Aluminum Corp of China Ltd <601600.SS>, <2600.HK>, Russia’s Rusal <0486.HK> and Rio Tinto Alcan <RIO.L> <RIO.AX>.
(Reporting by Eric Onstad; Editing by Edmund Blair)