China is different

The situation could not be more different in China itself. Production last year rose 7.7 percent to 24.38 million tons, according to the National Bureau of Statistics. The complementary production figures from China's Nonferrous Metals Industry Association are not out yet, but the two figures were closely aligned through the first 11 months of 2014.

They also have something else in common.

They are serious undercounts of the true state of aluminum production in China. To be fair to the IAI, which publishes the CNMIA figures, it now includes a 300,000-ton per month estimate for unreported Chinese production.

That is 3.6 million tons per year, equivalent to last year's production in the whole of Western Europe. And that is about right, according to China specialists AZ China. They estimate national production last year was somewhere in the region of 27.5 million to 27.7 million tons.

The twin drivers of higher production were continued expansion of capacity in the Xinjiang Uygur autonomous region and about 2 million tons of restarts thanks to discreet but effective power subsidies from local governments.

The combination will overwhelm closures of obsolete capacity again this year, with production likely to rise further to 29 million tons, according to AZ China.

The title of its Jan 9 research note, "oversupply to drown China's aluminum market", pretty much says it all about the chances of Chinese producers reaching the same state of enlightenment as their Western peers.

This polarization is plain to see in the performance of aluminum prices on the London Metal Exchange and the Shanghai Futures Exchange.

Relative to the start of 2014, the LME price is up almost 4 percent and the SHFE price is down by more than 13 percent.

Chinese smelters seem set for more financial pain. Speaking at Reuters Base Metals Forum, Paul Adkins of AZ China suggested industry leader Aluminum Corp of China Ltd is looking to form a consortium to channel metal away from the SHFE and directly to consumers as a way of propping up prices.

The chances of this working appear painfully slim.