The Aluminum Association is asking for a deeper investigation by the U.S. International Trade Commission into Chinese policies to save what’s left of the domestic industry, association executives say. In short, they ask for a “meaningful dialogue” with Chinese authorities in a move to end incentives and subsidies that they say fuel a global glut and squeeze U.S. producers out of the market.
Heidi Brock, president and CEO of the Aluminum Association, and Garney Scott, chairman of the Aluminum Association and president & CEO of Scepter, will testify at the U.S. International Trade Commission (USITC) public hearing today on the Investigation on the Competitive Conditions Affecting the U.S. Aluminum Industry. Executives from China’s metals industry association and aluminum fabricators will testify at the hearing as well.
“We are gratified that the Commission has begun the process of investigating the complex issues driving overcapacity and overproduction in the aluminum sector in China,” Brock will say, according to her prepared remarks, PRNewswire reports. “We remain committed to a healthy and growing global aluminum industry where all producers play by the same set of rules on a level playing field.”
The Aluminum Association represents aluminum companies and their suppliers throughout the value chain—from primary production to value-added products, and to recycling. The U.S. domestic aluminum industry contributes $75 billion in direct annual economic impact and employs 161,000 workers, according to the association. Although overall industry jobs grew three percent between 2013 and 2016, jobs in the alumina refining and aluminum smelting sector declined by more than half. This contributed to a loss of more than 7,000 jobs in that sector in just three years, Brock says. The contraction is attributed to aluminum overproduction in China.
“While overcapacity is most acutely impacting the upstream market today, it could just as easily impact our growing downstream market tomorrow,” Brock wrote in her written testimony. “That’s why the entire aluminum value chain we represent is committed to getting this right.”
In the past, China was the main market for its own aluminum production. However, Brock explains, Chinese manufacturers have continued to increase production even as demand in China slowed—turning to global markets to absorb the excess supply. Much of this expansion is being driven by misguided government policies such as artificial incentives, subsidies and provincial or local government employment programs, and has led to questionable trade practices, including metal misclassification and trans-shipment, she continues. The effect has been to depress global markets, making it challenging for many producers to operate and remain profitable, Brock says.
“The real issue, and what has changed over the last several years, is that a significant—in in fact, dominant—share of the global supply of aluminum is advantaged by Chinese government policies, from which the rest of the world’s industry does not and cannot benefit,” Scott wrote in his prepared remarks. “As an industry, we are united in our concern over the oversupply of Chinese aluminum.”
Interestingly, earlier this month, an article in the Wall Street Journal cited U.S aluminum executives who contend that some $2 billion worth of Chinese metal products had been stockpiled in Mexico as part of a scheme to re-export to the U.S., which imposes heavy duties on Chinese products. A total of one million tons of aluminum products were previously spotted by a pilot commissioned by a U.S. aluminum executive to fly over a factory in Mexico.
The China Non-ferrous Metals Fabrication Industrial Association wrote in its newspaper that it was impossible to identify the amount stockpiled from a plane. It further wrote that U.S. duty of 15 percent made it impossible for Chinese producers to export primary aluminum to the country.
What are your thoughts on excess aluminum and its impact on the value chain?