USMCA, duty evasion could dent demand for US-made aluminum extrusions: Tredegar

Bonnell Aluminum's parent company Tredegar Corporation said Monday that the US-based aluminum extruder could be negatively impacted by the pending US-Mexico-Canada Trade Agreement, or USMCA, and continued duty circumvention from foreign exporters.

"The duty-free importation of goods allowed under USMCA could result in lower demand for aluminum extrusions made in the US, which could materially and negatively affect Bonnell Aluminum's business and results of operations," Tredegar said in a report filed with the US Securities and Exchange Commission.

The Trump administration imposed a 10% import tariff on aluminum ingot and semi-finished aluminum under Section 232 in March 2018.

Tredegar said countries affected by the tariff included many from which Bonnell has historically sourced aluminum products.

Aluminum extrusions made in Canada and Mexico and exported to the US will be exempt from the 10% tariff under the USMCA, allowing the products to be sold in the US at very competitive prices that may pressure demand for US-made extrusions, Tredegar said.

Tredegar said the failure to prevent foreign competitors from evading anti-dumping and countervailing duties could also adversely impact Bonnell.

Anti-dumping and countervailing duty orders on aluminum extrusion imports were last extended in April 2017 for a period of five years.

"Chinese and other overseas manufacturers continue to try to evade the anti-dumping and countervailing orders to avoid duties," Tredegar said. "A failure by, or the inability of, US trade officials to curtail the evasion of these duties, or the potential reduction of applicable duties pursuant to annual administrative reviews of the orders by the US Department of Commerce, could have a material adverse effect on the financial condition, results of operations and cash flows of our aluminum extrusions business."

Bonnell's full-year aluminum extrusion sales volume slipped 7% year on year to 208,249 lbs in 2019. The company's 2019 sales revenue dropped 7.6% to $529.6 million in the same period.

Tredegar said the decline in sales was primarily attributed to lower sales volume and lower metal costs.

"Lower bookings and backlog information for Bonnell Aluminum and industry data continues to indicate softness across all key end-use markets," Tredegar said.