We had a great turnout for our AZ China International Aluminium & Carbon conference last week in Beijing. And there were even several prize winners! During the welcome reception on May 5, several people won a free wine tasting voucher for having attended all four AZ China conferences. Two people also won Bespoke Beijing vouchers.

It was interesting that the 3 economists that we had on stage all saw China’s economy growing at roughly 7% over the rest of this decade. Even the most bearish outlook, from the Conference Board’s Andrew Polk, conceded that growth will continue at close to this level.

However, Andrew also warned that it is “wishful thinking” to rely on urbanisation as a driver of economic growth. While there is no doubting that housing and construction will continue to be an important part of China’s economic future, Andrew warned that there are many problems attached to that sector. Meantime, it is going to take a long while for domestic consumption to grow to high enough levels to have a major role in the economy, and much work is still to be done in China’s social security and personal savings network.

The aluminium panels were somewhat more pessimistic. Both Mr Lang Dazhan and Mr Dong Chunming were concerned about growth in capacity, and the pressures on the financial health of China’s aluminium smelters.

What did become clear, when looking at the economic discussion in alignment with the aluminium discussion, is that as China moves from being a “blue collar” industrial economy to a “white collar” smart economy, the rest of the world will see increasing threats of jobs transferring to China’s millions of university graduates, and an increase in semi finished products being shipped. China will move away from toys and clothes as an export staple into higher end products, and this will change the relationship between aluminium users in the rest of the world and Chinese producers.

In the petcoke discussion, despite the increased risks arising from shale oil in the USA, and potentially elsewhere, the conclusion seemed to be that there is no problem sourcing anode grade petcoke, provided one is prepared to pay the price. Mr Gerry Sweeney put this succinctly – it’s a matter of price. The problem of course is that consumers of petcoke are in no position to pay extra for their coke until the aluminium price improves, and that may still be some time off. It wasn’t discussed in the panel session, but it seems that coke prices could start to rise faster than aluminium prices, over the next couple of years.

If you missed out on attending, here are a few pictures.