Dr Yanchen Wang,
Managing Director, SMM

China’s Decarbonisation and Impact on the Aluminium Market

China is the largest carbon emission country around the world. In September 2020, President Xi Jinping announced China will aim to hit peak emissions before 2030 and for carbon neutrality by 2060. In 2020, around 65% of Chinese electricity was generated by coal-fired power stations. At the same period, according to NBS, China produced 2,400Mt cement and 1,065Mt crude steel, which are the top three largest carbon emission industries in China. 80% of primary aluminium output in china bases on the coal-fired power. Given the current China’s economy structure and energy mix, these carbon emission reduction targets are not easy to achieve.

In order to achieve these targets, the Chinese government need issue more policies to drive industries to more actively reduce their carbon emission. The supply-side reform that started in 2015 has created a solid foundation for energy-intensive industries to hit peak emissions before 2030. More new policies could be issued during 14th and 15th 5-year periods, which could encourage the development of renewable energy, recycling industries and new carbon reduction technology innovation. The Chinese government will start the nationwide ETS for coal-fired power industry in June. Aluminium and other energy-intensive industries would likely be covered by the ETS as well in the next couple of years. We cannot rule out the possibility of the Chinese government change the import/export tax or VAT rebates on aluminium products in the future, like most recently what they have done on 146 steel products.

The impact of the carbon emission reduction in Chinese aluminium industry will be great, not only in China, but also around the world. The global market balance will be significantly affected, including primary and scrap.


Biography

Dr Yanchen Wang is the managing director of SMM London office, which was established in May 2021.

Before joining SMM, he was the principal analyst at CRU and the head of Chinese aluminium market research. Dr Yanchen Wang has worked at CRU for 15 years.

Dr Yanchen Wang is a well-known analyst in the global aluminium industry. His areas of expertise include global aluminium, alumina, bauxite, downstream, recycling and power/energy market analysis, cost modelling and value assessment of aluminium assets. In recent years, he has extended his research in the other base metal markets, macroeconomic and relative industries, like thermal coal, gas, power, and carbon emission markets. Specific projects that he was involved in cover the whole value chain of the aluminium industry, including bauxite mining, alumina refining, aluminium smelting and downstream. He has visited more than 100 bauxite mines, alumina refineries, aluminium smelters, downstream and recycling assets around the world, in China, Russia, Australia, Europe, Indonesia, Malaysia, the Middle East and North America. He also often attends technical and market conferences and gives presentations as a key-note speaker.

Yanchen has a PhD in Engineering from Chinese Academy of Sciences.