The immediate threat is to China's ambition to achieve coveted market economy status at the World Trade Organization, 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 U.S. Aluminum Association has also been lobbying against the granting of market economy status but it is largely fighting alone. Aluminum 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 forShanghai.

The steel sector has piled up accumulating losses due to poor profitability. It and coal are viewed as major contributors to Chinese environmental problems. And it represents an old economic model, based on fixed asset investment, which Beijing wants to discard in favor of a more consumerist path.

Although China's aluminum 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.

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