By Stuart Burns
The EU announced the end of the temporary suspension of anti-dumping duties on rolled aluminum products in the bloc. The suspension was due to expire in July. The news is timely following last week’s announcement that the UK would impose provisional duties for six months while it conducts an anti-dumping investigation into imports of aluminum extrusions from China.
The European Commission conducted a similar investigation last year regarding Chinese aluminum plates, sheets, strips and foils. On October 11, they issued findings indicating that the margin of dumping was between 14.3% and 24.6%. Although the Commission has implemented anti-dumping measuresthey suspended the decision for nine months due to the tight market following the pandemic rebound.
The decision was long in coming
In March, the EC consulted the parties concerned to decide whether it was necessary to continue to extend the period of suspension. They concluded that there was sufficient spare capacity in the European market. On average, utilization was found to be around 80%. This proved to be more than satisfactory for the measures to be reintroduced.
That brings us to this week. As noted, the European Commission has officially announced that it will reinstate anti-dumping duties after the extension expires on July 12. During the investigation period (July 1, 2019 – June 30, 2020), the EU imported around 170,000 tonnes of the products involved in the case from China. For scale, this is more than the UK’s total annual flat-rolled aluminum consumption.
The affected products included coils or coiled strips, sheets or circular plates with a thickness of 0.2 mm to 6 mm. It also included aluminum plates with a thickness of more than 6 mm and aluminum sheets and coils with a thickness of 0.03 mm to 0.2 mm. That said, the case excludes related aluminum products used in the manufacture of cans, cars and aircraft parts. It is likely that this is the result of effective consumer lobbying.
Rolled aluminum is a big problem for “Greater China”
Decision comes amid surge in Chinese aluminum exports. The surge stems, in part, from a lower SHFE primary price against the LME and increased VAT refunds for exporters. There has also been an increase in domestic aluminum production in China thanks to the easing of energy restrictions and COVID lockdowns, which have slowed consumption.
It is true that the EU decision alone cannot stem the flow of Chinese metal. However, the original investigation revealed that tolls set at or around the underpricing range (14-25%) may result in the market simply paying the cost. This may not apply to the standard commercial product. However, for higher alloys, European availability remains limited despite what the EC may believe.
Some tasks do more harm than good
For example, when the UK imposed 35% tariffs on Russian materials last month, the market largely just paid for it. Of course, the material in question was already in transit and there was no ready alternative. Yet this indicates that when countries impose import duties, it often does not penalize the producer. Instead, it leaves the burden to the importer or, more likely, the consumer.
Fees can deter new purchases in the longer term, assuming the market is sufficiently well served by other supply options. But as the markets remain tight, they may end up driving up the market price that consumers are forced to pay from all suppliers. This even includes suppliers who are not affected by the rights. In their case, they can simply take advantage of scarcity, inflating prices to just below the anti-dumping level.
This was certainly the case under 232 in the United States. This is probably the case in the EU and the UK. That is, until the market softens and the metal becomes so readily available that suppliers have to fight for business.
Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.