Reuters
LONDON
"China has committed to ensure that its central government policies and support do not target the net expansion of steel capacity; and to actively and appropriately wind down 'zombie enterprises'through a range of efforts, including restructuring and bankruptcy."
This statement was made by US Treasury Secretary Jack Lew earlier this month after high-level talks with Chinese officials in Beijing.
There is plenty of devil in the missing detail, not least the scale of steel production overcapacity in China, but at least there seems to have been some meeting of minds.
Not so when it comes to China's equally giant aluminium sector, however.
The two sides failed to reach any sort of agreement other than to hold more talks, according to Lew. Producers in the rest of the world will remain beholden to China's own aluminium dynamics, it seems. That promises more pain ahead since all the signs are that the country's smelters are once again ramping up production.
There are many similarities between steel and aluminium when it comes to China's influence on the rest of the world.
China is the world's largest producer in both markets, accounting for 51.5 percent of global steel output and 54.4 percent of global primary aluminium output in April.
China has been exporting excess production of both steel and aluminium in the form of semi-manufactured products.
Steel product exports last year totalled 112.4 million tonnes, representing around 14 percent of the rest of the world's output.
Aluminium product exports of 4.2 million tonnes represented an even larger 17 percent of the rest of the world's output.
In both markets there has been a strong reaction from other producing countries, which allege unfair subsidies to loss-making Chinese operators.
The push-back in steel markets has already taken concrete shape in the form of a lengthening list of anti-dumping duties, most recently on U.S. imports of Chinese corrosion-resistant steel.
In aluminium the reaction is still building, particularly in the United States, where the International Trade Commission in April opened an investigation into the domestic production sector and global trade flows.
China wasn't explicitly referenced but no one is in any doubt as to who is in the frame for the rapid decline in US luminium production. So how to explain Beijing's willingness to engage with its steel critics but not its aluminium critics?
There are two key differences right now, one external and one internal. Such has been the reaction to Chinese steel exports, not just from the United States but also from other major economic powers such as the European Union, that it poses a clear and present danger to Chinese policy.
The immediate threat is to China's ambition to achieve coveted market economy status at the World Trade Organisation, an ambition explicitly targeted by steel companies and policy-makers unhappy with the prospect of even heavier Chinese exports and diminished leeway in dealing with them.
The US Aluminum Association has also been lobbying against the granting of market economy status but it is largely fighting alone. Aluminium doesn't seem to be on the agenda for European politicians, probably because the bloc's smelter sector is far less important, in both concrete and symbolic terms, than steel.
Secondly, the scale of excess steel production in China is a major multi-dimensional problem for Beijing.
The steel sector has piled up accumulating losses due to poor profitability. It and coal are viewed as major contributors to China's environmental problems. And it represents an old economic model, based on fixed asset investment, which Beijing wants to discard in favour of a more consumerist path.
Although China's aluminium smelter sector has its own share of chronic non-performers, recent growth has been driven by a new generation of operators, widely viewed as among the most modern and lowest-cost operating anywhere in the world. Its problems, viewed from Beijing, are simply not on the same scale as the rust-belt steel and coal industries.
With no overriding pressure either externally or internally to restrain China's aluminium sector, it will, it seems, be left largely to do its own thing. Which right now seems to be to increase production again.
The recent monthly output figures from China's Nonferrous Metals Industry Association have been wildly volatile, even by the erratic standards of the past.
But the current trend is firmly upwards. Annualised run rates increased by almost 650,000 tonnes over the course of April and May. May's average daily output of 86,290 tonnes was the highest since November last year.
Smelters are reactivating capacity in response to the rally in local prices. The most active contract on the Shanghai Futures Exchange (ShFE) is trading back above the 12,000 yuan-per-tonne level, having fallen below 10,000 last November.