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Metal Miner

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China's Surge in EV Exports to Europe Sparks Aluminum Industry Concerns

  • European EVs contain significantly more aluminum than ICE vehicles, potentially boosting demand for aluminum.
  • Chinese exports of EVs to Europe have seen a significant increase, putting pressure on European manufacturers and the aluminum industry.
  • The EU aluminum industry is already struggling with high energy prices and competition, facing a crisis with job losses and capacity cuts.
Metal Production

Via Metal Miner

Are electric cars going to benefit or threaten Europe’s aluminum industry? At first, it might appear a stupid question. However, it is also one that aluminum industry news sources continue to ask.

The average European EV contained 283kgs of aluminum in 2022 compared to 169kgs for ICE vehicles. That is according to a study by European Aluminum reported in the Financial Times. Surely, a consumption per vehicle of nearly double the aluminum content proves an outstanding opportunity for the region’s aluminum producers, right? Well, opportunity, yes. However, another rapidly evolving dynamic explains why the industry continues to panic about rising EV demand.

According to Chinese customs data, China exported $13.1 billion worth of EVs to Europe in the first seven months of 2023. Compare that figure to $15.4 billion in the whole of the previous year, and it represents a 46% increase. The FT states that the majority of these vehicles are China-made versions of Western brands such as Tesla. However, European sales of EVs belonging to familiar brands like MG (now Chinese owned) also increased year over year. Now, another major Chinese carmaker, BYD, has started aggressively advertising their own models in European markets.

Aluminum Industry News Reports: China’s Big Year

China currently produces more than half of the electric cars on the road today. Moreover, ING states that the country already exceeded its 2025 target of 20% for new energy vehicle (NEV) sales. The bank quoted China Association of Automobile Manufacturers (CAAM) data, saying that China’s NEV sales officially reached a new record in October at 956,000 units. This surpassed September’s previous record of 904,000 and represents a 34% increase over the 714,000 units sold in the same period last year.

It’s important to note that CAAM’s figures are the carmakers’ wholesale sales, meaning they include both domestic sales and exports. Excluding exports, China’s October NEV sales were still a record 832,000 units, up 2.9% from September.

Not surprisingly, some aluminum producers have been actively supporting EU plans for an anti-subsidy probe into the pricing of Chinese EVs. Furthermore, many suggest they represent unfair competition with serious risks of flooding the market. The post also reports that China is building battery plants far beyond the levels needed to meet domestic demand. The fact that the plants remain openly backed by regional subsidies and lending suggests manufacturers want to channel excess supply into overseas markets.

EU Aluminum Industry in “Crisis Mode,” Battling Imports

These developments continue to take place against the backdrop of a regional industry Aluminum Deutschland recently described as being in “crisis mode.” Continually high energy prices due to Russia’s invasion of Ukraine left aluminum companies struggling to cover costs. In fact, aluminum industry news sources state that a significant number of producers report dealing with negative outlooks, short-time work, capacity cuts, and job losses. In some cases, producers moved jobs overseas.

Despite the shuttering of European smelters, the aluminum market remains in surplus, while the LME remained in the doldrums for much of 2023. According to ING, the green sector – particularly EVs – helped buoy the Shanghai market, which continues to trade at a premium.  

Meanwhile, China’s import of primary aluminum and wrought products surged 27.5% year to date, much of it cheap Russian metal Rusal cannot sell elsewhere. However, domestic Chinese capacity continues to run at the Beijing-mandated 45 million ton limit, representing more than half of all primary aluminum produced worldwide.

The EU already introduced anti-dumping penalties on a range of Chinese aluminum semi-finished products. However, all this really does is deprive domestic automotive companies of cheap materials, making it even harder to compete against low-cost imports of finished products. Now, the EU wants to shift its attention to finished products in an effort to level the playing field.

In the long term, EV consumption of aluminum products remains a huge opportunity for the aluminum industry. However, the move to EVs will continue to pose a threat to EU aluminum companies if the inflow of Chinese vehicles continues unchecked.

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By Stuart Burns

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