Tokyo — US tariffs on Chinese aluminum products, intended to protect the US industry from imports, has actually encouraged Chinese exports, consultancy Wood Mackenzie said Monday.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The US imposed a 10% import tariff on aluminum products in March last year under Section 232 of the Trade Expansion Act, following Commerce Department findings that aluminum imports were harming US national security interests. In January, the US International Trade Commission determined an antidumping margin of 49.85% to Chinese exporters of common aluminum alloy sheet products, as the products were sold in the US at less than fair values over the April-September 2017 period.
"US tariffs on Chinese semis are also playing an import role in making Chinese metal attractive. Higher prices in the US markets are attracting inflows from the rest of the world, leaving a supply gap in the rest of the world. This is being filled by Chinese metal," Wood Mackenzie said.
The consultancy said that as long as the US restricts imports of Chinese aluminum, China will continue to actively export to other countries.
Wood Mackenzie's findings affirm a view expressed by the EU a year ago, that China's excess capacity and new trade flows triggered by the US Section 232 measures may develop into a threat to EU companies.
On April 25, 2018, the EU started to ask aluminum importers for documentation to study trade patterns.
"Rapid and anticipated trade data is necessary to deal with the vulnerability of the Union aluminum market to sudden changes on world aluminum markets. This is particularly important in the present situation marked by uncertainties as to the potential trade diversion that may be caused by the US measures under Section 232," the EU said.
Last month, the Indonesian government determined that aluminum foil imports from China were hurting the domestic industry and started to study safeguard measures.
Wood Mackenzie said the increase in exports of Chinese semis was a "cyclical and structural" mix.
"Cyclical, due to the slowdown in Chinese primary demand, and structural, due to trade and government policies," it said.
It pointed out that Chinese exports will be driven by government policies geared towards rebalancing aluminum production and consumption, and that the government will implement reforms to consolidate the downstream sector.
-- Mayumi Watanabe, firstname.lastname@example.org
-- Edited by Jonathan Fox, email@example.com