Despite howls of protest from consumers, the Biden administration has doubled down on the Trump administration’s trade barriers with its latest move on aluminum tariffs.
The administration recently slapped semi-finished flat rolled aluminium anti-dumping duties on 18 countries supplying the US market.
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Previous administrations’ focus on China — first on extrusions in 2011 and then foil and sheet in 2018 — succeeded in bringing down imports from 620,000 metric tons in 2017 to 170,000 tons last year, Reuters reported.
However, the wider Section 232 10% tariff is so riddled with exclusions and special exemptions that imports from the rest of the world have continued to make up a significant proportion of the market supply landscape.
Imports of sheet, plate and strip totaled 1.3 million metric tons in 2019. That represented about 62% of total aluminum product imports that year, according to Reuters. Although volumes shrunk sharply to 836,000 tons last year, this was due to the broader COVID-19 disruption to the U.S. manufacturing sector.
Total semis imports last year fell by 20%. Domestic shipments dropped by only 13% through November, suggesting the imposition of preliminary duties in October was already impacting buyers’ decisions.
According to Reuters, the new duties hit seven of last year’s top 10 product suppliers to the U.S. market, including South Korea, Germany and Turkey.
Canada, Saudi Arabia avoid aluminum tariff
The duties spared Canada, however, from which imports increased by 17%. They also spared Saudi Arabia, where Alcoa retains a close relationship with the Ma’aden smelter and rolling mill, despite having divested its 25.1% shareholding in 2019.
That Alcoa and its Saudi partner should essentially get an exemption comes as no surprise.
They no doubt have a very effective lobby group in Washington.
Canada’s exemption is not surprising, either. The United States-Mexico-Canada Agreement (USMCA) precludes Canada from tariffs and rightly recognizes the country as a key strategic supplier.
On the other hand, more of a surprise is Russia’s Rusal. Historically, Rusal was a primary supplier. In recent years, the firm has successfully moved up the value chain. As primary metal imports have declined, value-add products have increased.
Tariff responses around the world
As a consequence of US action against China over recent years, other regions have taken steps to counter the inevitable flow of metal that has gone looking for a new home.
Trailing in America’s wake, Europe has been only marginally less assertive in introducing controls of its own. First extrusions and now flat rolled products have been targeted with duties of up to 48% on Chinese product.
As a result, prices in Europe have surged. Mill lead times have followed, with many flat rolled mills now on July — or even August — delivery.
Assessing Chinese export data
Last year’s 10% fall in Chinese exports should not be taken a sign of anything. It was an unprecedented year, both in terms of global demand and a recovery within China.
Even so, the country exported 4.6 million tons. That is equivalent to 50% of Europe’s total demand, according to European Aluminium data.
Even worse for producers in the rest of the world, volumes are accelerating again. China exported 842,000 tons in the first two months of 2021, according to Reuters. That total marked a 26% year-over-year jump.
Such a trend does not bode well for a calm and measured market this year. As excessive supply from China clashes with increasing trade measures to protect North American and European markets, prices and supply will become progressively more out of touch and fragmented.
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