Trade Body Calls for Talks with China to Address Aluminum Overcapacity

SEATTLE (Scrap Monster):  The Aluminum Association has sent an open letter to the U.S. President, calling for permanent, quota-free exemptions from Section 232 tariffs to all responsible trading partner countries. It must be noted that the tariff exemptions granted to several countries are due to expire by April this year.

The letter written by Heidi Brock, President and CEO, Aluminum Association, invites the U.S. President’s urgent attention to the vital aluminum industry. It urges the President’s office to grant permanent exemptions without quotas for aluminum trading partners that operates as market economies, while continuing its evaluation and implementation of Section 232 remedy. It also calls for bilateral engagements with China to address the structural aluminum overcapacity problems.

The Association members believe that the massive overcapacity in primary aluminum as well as downstream products is mainly driven by China’s market-distorting policies. Having reached a major turning point in trade negotiations with China, the U.S. now has a great opportunity to find a permanent solution to this problem once and for all.

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Meantime, it reminded the U.S. administration that the proposed Section 232 tariffs must in no way, disrupt the North American supply chains. It must be noted that out of the yearly consumption of nearly 5 million metric tonnes of primary aluminum by the U.S, domestic smelting facilities supply only around 2 million metric tonnes. The rest of the demand is met by imported metal.

It takes time and huge capital to build new smelting capacities. In the near-term, the U.S. may have to depend on its trading partners. The implementation of the Section 232 aluminum remedy should not disrupt current trading relationships, the letter noted. Any quotas on key trading partner countries will only distort the market, especially on the back of supply shortage on account of sanctions on Russian aluminum, the letter said.