Construction application for aluminum booming in China

Among the findings of an analysis of the Chinese aluminum market in 2020 is the emergence of a material substitution pattern in aluminum’s favor. According to the recent analysis by Goldman Sachs, users of lumber as forms to frame concrete have been urged to replace wood with aluminum because of the metal’s recyclability.

In a December Reuters article by commodities writer Andy Home, citing the analysis, he indicates there has been an ongoing “switch from wood to aluminum for casting form work in the channels used to lay concrete” in China. 

As occurs often in that nation, the sudden shift was prompted by a central government directive. Home writes the change has been spurred by “new government guidelines on reducing construction waste [that] have translated into eight provinces issuing preference policies on aluminum alloy casting form work usage.” Those guidelines were issued in May of this year, according to Home.

Home says the Goldman analysis authors estimate the growing application could “boost the amount of metal used in construction by 500,000 metric tons this year relative to 2019.”

The change has occurred at the same time China’s post-COVID-19 rebound has spurred overall aluminum consumption and during a year when quotas on aluminum scrap imports placed a limit on secondary production in China. The confluence of factors resulted in China, the world’s largest-capacity producer of the metal, importing finished and semifinished aluminum in 2020.

The advent of a new “resource” designation for some grades of aluminum scrap appears to have re-opened the doors for scrap imports in China, prompting high scrap prices in the United States and beyond. As 2021 begins, the new application seems poised to provide yet one more form of supply pressure on aluminum scrap.