Russian aluminum producer Rusal said Thursday in its second quarter results that the increase in exports of aluminum semi-finished products from China is the main reason behind a global surplus this year.

"The main change to the supply environment resulted from the export of aluminum semis from China. Net exports of semis rose by 47% year on year in H1 2015," the company said.

The producer noted that overcapacity in the Chinese market continued throughout Q1 with a record supply of 7.45 million mt, up 8.3% year on year.

As a result, Rusal believes total aluminum stocks in China grew to 3 million mt in Q1, an increase of 1% year on year.

"The aluminum balance in China improved during Q2, and as a result total stocks fell by 353,000 mt to 2.65 million mt by the end of Q2. It is expected, that the aluminum balance in China will continue to improve in Q3," it said.

From January to May, Chinese installed aluminum capacity rose by 1 million mt/year to 36.545 million mt.

Around 1.5 million mt/year of operating capacity was commissioned and around 510,000 mt/year was resumed for the same period.

This created additional supply pressures in domestic markets, which resulted in a 2.6% decrease in the Shanghai Futures Exchange aluminum price during H1, Rusal said.

"The decline in price continued through July 2015, and as a result about 39% of Chinese aluminum production capacity, or 12.3 million mt, were loss-making at an average SHFE price in July 1-20 of Yuan 12,380/mt [about $1,930/mt at current rates]," the company added.

According to Rusal, China has been exporting heavy gauge aluminum extrusions, plate and cast coil, which are made with minimum semi-fabrication transformation.

These products are then either remelted or stockpiled and used as collateral in financial transactions.

Rusal is skeptical that Chinese aluminum producers will be able to increase semis exports in H2, as exports are already unprofitable.

"This may result in a potential slowdown in Chinese exports in the second half of the year," it said.

As a result of both rising Chinese semi exports and growth of ex-China aluminum production, Rusal estimates that the global aluminum market faces a minor surplus of 277,000 mt in financial year 2015.