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Recently, the Non-ferrous Metals Industry Association has been working on addressing the issue of overcapacity in the aluminum industry. The New Deal aims to boost the use of aluminum in various sectors, promoting energy efficiency and emission reductions, as well as encouraging the use of 316L stainless steel plates. While this initiative may temporarily drive up aluminum prices, it is unlikely to push them significantly above cost levels in the long run.
The New Deal highlights three key strategies for expanding aluminum’s role: replacing steel in transportation vehicles, substituting copper with aluminum in power cables, and using aluminum instead of wood in furniture production. These measures are designed to increase aluminum demand across industries such as automotive, aerospace, and electronics. Experts believe that global per capita aluminum consumption will continue to rise, making this a long-term trend.
However, implementing the New Deal faces significant challenges. Even if all obstacles are overcome, it will take time to address the current overcapacity in the aluminum sector. Most current applications remain limited to basic wear-resistant uses, failing to meet urgent industrial needs. More effective policies are necessary to drive meaningful change.
Moreover, the problem of excess aluminum production capacity is pressing, and the proposed alternatives will take years to show real impact. The aluminum industry is expected to enter a destocking phase from April to May. In the second quarter, China’s economic growth is likely to remain weak, with downstream demand struggling to pick up. Although monetary policy has slowed its tightening pace due to lower-than-expected inflation, the long-term issue of overcapacity remains unresolved.
Infrastructure projects are also facing difficulties, as local governments struggle with financial constraints, and real estate regulations continue to weigh on demand. This makes it hard for the industry to recover quickly.
Aluminum has certain disadvantages compared to copper, such as lower electrical conductivity and heat dissipation performance. Currently, aluminum tubes, aluminum alloy tubes, or copper-clad aluminum wires cannot fully meet the demands of air conditioning and electrical systems. Additionally, the cost factor is critical. When the copper-to-aluminum price ratio exceeds 4:1, manufacturers have a stronger incentive to switch to aluminum. However, in the case of “aluminum substitute steel†in transportation, the cost comparison between steel plates and aluminum alloys is not favorable. The main benefit of using aluminum in vehicles lies in energy savings and environmental protection, as well as reducing vehicle weight. But for most heavy-duty vehicles, these benefits are not essential, and they often use high-wear steel plates instead.
Finally, the idea of “aluminum substitute wood†in the furniture industry is even more challenging to implement, given the material properties and consumer preferences. Overall, while the New Deal outlines an ambitious vision, its practical implementation remains uncertain and requires substantial support and adjustments.