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The Aluminum Association sent a letter to President Donald Trump on Tuesday calling for quota-free tariff exemptions for all “responsible trading partners countries,” while also calling for specifically addressing Chinese overcapacity.

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“As you continue to evaluate and implement the Section 232 remedy, I urge you to grant permanent exemptions – without quotas – for our aluminum trading partners that operate as market economies,” said Heidi Brock, president and CEO of the Aluminum Association, in the letter. “I also encourage you to engage China to address structural aluminum overcapacity.”

The U.S. announced last month Section 232 tariffs of 25% and 10%, respectively, on steel and aluminum imports. Several countries have won temporary exemptions to date, including Canada, Mexico, Brazil, Argentina, Australia and the E.U. South Korea negotiated a long-term exemption as part of talks to revamp the U.S.-Korea Free Trade Agreement, with a quota imposed on South Korea  instead equivalent to 70% of average annual exports between 2015 and 2017.

In the past year since the U.S. launched its Section 232 probe in April 2017, the Aluminum Association has advocated for trade measures that do not hurt market-economy trading partners, instead calling for action to address Chinese overcapacity.

“The association’s member companies share the belief that China’s market-distorting behavior drives massive overcapacity in both primary aluminum production and downstream products,” Brock wrote. “Now that the United States is at a major turning point in trade negotiations with China, we see a historic opportunity for you to address this persistent problem once and for all.”

Brock argued 97% of U.S. aluminum production jobs are in mid- and downstream production, with many relying in some way on aluminum imports.

“We strongly believe that the Section 232 aluminum remedy should not disrupt current trading relationships with responsible trading partners,” Brock wrote. “Any quotas on these key partners will only further distort the market, particularly if new sanctions on Russian aluminum lead to tightened supply conditions.

“Quotas would paradoxically cause imports of semi-fabricated products from China to be more competitive in the U.S. market, as manufacturers scramble to find metal.”

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The full letter is available here.


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MetalMiner’s Stuart Burns touched on the rapid swing back downward for the aluminum price, which surged on news of U.S. sanctions on Russian oligarchs and companies but quickly dropped when the U.S. Treasury opened the door to potential easing of sanctions.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

But aluminum wasn’t the only metal to see its price drop precipitously in the last week.

LME nickel rose 15.8% between April 3 and April 19, from $13,555/mt to $15,700/mt. That surge has reversed, however, in recent days.

From that $15,700/mt mark, the price has dropped 10.7%, down to $14,025/mt as of April 23.

LME nickel price. Source: LME

The nickel price jumped 10% in a single day last week, the Financial Times reported, marking the biggest one-day jump since 2008, on concerns regarding the potential for sanctions to spread to Russian firm Norilsk Nickel.

Norilsk, however, was not among the 12 companies listed in the sanctions announced by the U.S. Treasury April 6.

Nonetheless, with the U.S. Treasury opening the door for the easing of sanctions if Russian oligarch Oleg Deripaska steps down from his role with aluminum giant Rusal — one of the companies listed in the initial sanctions announcement — the price of aluminum and other metals, like nickel, have tracked back down.

Given Rusal’s stake in Norilsk, last week’s fears regarding a potential supply crunch have for now been somewhat allayed. As such, with the Treasury’s softened stance on sanctions, prices have come back down.

On Monday, the Treasury extended the deadline for U.S. individuals to wind down activities with Rusal to Oct. 23.

“RUSAL has felt the impact of U.S. sanctions because of its entanglement with Oleg Deripaska, but the U.S. government is not targeting the hardworking people who depend on RUSAL and its subsidiaries,” Treasury Secretary Steven Mnuchin said in a prepared statement. “RUSAL has approached us to petition for delisting.  Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL’s petition.”

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At least for now, that’s good news for electric vehicle manufacturers, who are increasingly looking to nickel for use in lithium-ion batteries.