European Commission launches investigation into flat-rolled aluminum from China

Andrey Kuzmin/Adobe Stack

Following on from an investigation started in February, the European Commission has launched an anti-dumping investigation into imports of aluminum flat-rolled products from China.
The trade group European Aluminium made the formal complaint to the European Commission.
Stop obsessing about the actual forecasted aluminum price — it’s more important to spot the trend. 

Products included, not included

According to Aluminium Today, the products under review include: sheets; coils; coiled strips; aluminum circles of a thickness of 0.03 mm to 6 mm; and aluminum plates over 6 mm.
Interestingly, not included in the investigation will be: aluminum cans; body panels for automobiles; and aircraft parts of a thickness greater than 0.8 mm (for which Chinese penetration of the European market is substantially lower).
“It’s obvious that Chinese firms aren’t respecting the global rules of free and fair trade, and the numbers show they are dumping more and more products on our market,” Aluminium Today quoted European Aluminium Director General Gerd Gotz as saying. “The volumes of excess capacity they have built up are so massive, they could replace the entire European aluminium production.”

Rising flat-rolled imports from China

Flat-rolled aluminum imports from China into the E.U. included in the scope of the investigation increased from 171,000 metric tons in 2016 to 330,000 tons last year. In 2019, the market share of these imports from China reached more than 12%. Market share had doubled compared to four years ago, according to Aluminium Today.
In a recent report, the OECD stated global aluminum companies have received up to USD 70 billion in different forms of support over the 2013-2017 period.
Notably, 85% of the documented subsidies went to just five Chinese firms.

The green argument

Individuals and businesses around the world are devoting more and more to the carbon footprint of the aluminum industry. In that vein, some point to the environmental impact of aluminum production in Europe versus China (and the world at large).
Carbon intensity of European primary aluminum production is approximately 7kgCO2e per kg of aluminum, according to European Aluminium.
Meanwhile, the global average is 17kgCO2e per kg of aluminum. The Chinese average is 20kgCO2e per kg of aluminum.
The investigation will take up to 15 months. As such, the E.U. is unlikely impose measures before March 2021 at the earliest.
In the meantime, importers will no doubt start diversifying supply sources to protect their supply chains. The trade will not want to be left with metal in the system when the E.U. makes a decision.
The impact is likely to be felt during the second half of this year as buyers diversify away from Chinese sources.
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