This Morning in Metals: Industry Groups Call for Removal of Aluminum Tariff

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This morning in metals news, the Aluminum Association called for the removal of aluminum tariffs on Canada and Mexico, Norsk Hydro offered another update on its operations one week after it was hit by a cyber attack, and Vale SA’s 4Q 2018 iron ore output increased 8.2%.

Aluminum Groups: Remove Aluminum Tariff Before Passage of USMCA

The Aluminum Association released a joint letter with the Aluminum Association of Canada and the Instituto Mexicano del Aluminio calling for the removal of the U.S.’s Section 232 aluminum tariff before ratification of the pending United States-Mexico-Canada Agreement (USMCA).

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USMCA, meant as the successor to the North American Free Trade Agreement (NAFTA), was signed by the three countries’ leaders late last year, but still must be ratified by each country’s legislature. The U.S.’s Section 232 tariffs on steel and aluminum remain in effect for its neighbors to the north and south.

As such, the tariffs are a key sticking point as the parties move toward approval of the agreement.

“The new USMCA cannot work as intended without reinstating exemptions for Canada and Mexico from the 232 tariffs,” the joint statement said. “The Section 232 tariffs are limiting access for North American aluminum producers to reach their suppliers and customers – and in some cases, their own subsidiaries and facilities. This will hamper continued investment for our industry, which has experienced solid growth and significant investment in recent years.”

The letter also argued against the imposition of quotas.

“Replacing a tariff with a quota on aluminum imports in North America would be highly detrimental,” the letter continued. “If there is a quota system for aluminum trade within North America, it will be difficult to ensure that downstream manufacturers of aluminum products will have access to the aluminum inputs they need. Because primary aluminum is a traded commodity on the London Metals Exchange (LME), metal traders would be competing with mid- and downstream producers who need value-added primary aluminum with specific characteristics for their manufacturing processes. Additionally, semi-fabricated aluminum products can cross borders several times before final production.

“In a worst-case scenario, product could get stuck on one side of the border when the quota has been filled. To avoid shortages, companies may be forced to stockpile the metal, tying up capital that could be used to pay employees or upgrade equipment and exacerbating the impact of a quota system.”

Norsk Hydro Offers Updates in Wake of Cyber Attack 

Norwegian aluminum maker Norsk Hydro last week was struck by a cyber attack, forcing operations to come to a halt.

A week on, the firm offered an update on its process to bring operations back online. According to a note on Hydro’s website, “most operations are running at normal capacity.”

“In the most affected business area, Extruded Solutions, production is now at 70-80%, except for the Building Systems business unit, where operations remain almost at a standstill,” the company said in a release.

The company’s primary metal sector is “running as normal, with higher degree of manual operations.”

Vale Posts Higher Iron Ore Output in 4Q

In the quarter prior to the fatal tailings dam breach at Vale SA’s Corrego do Feijao mine in Brazil, the company’s iron ore output rose 8.2%, Reuters reported.

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Vale’s 2018 iron ore output reached 384.6 million tons, according to the report.

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