Aluminum prices have cratered since late February, falling by over 50% during that interval. Suppressed demand thanks to COVID-19 closedowns are certainly one reason.
Another reason might be that China is dumping its excess aluminum onto global markets. The domestic U.S. industry has complained that Chinese aluminum has been entering the country through third parties to evade the Trump administration’s Section 232 tariffs, and the United States Department of Commerce has issued proposed rules to combat that phenomenon.
| Aluminum Imports by Ocean Carrier in MT | ||
| Ocean Carrier | Q1 2020 | Q1 2019 |
| Wagenborg Shipping BV | 51,235.31 | 283,840.99 |
| Atlantic Ro-Ro Carriers Inc | 50,976.50 | 3,189.31 |
| G Two (G2) Ocean US Ltd | 43,465.80 | 55,155.41 |
| Spliethoff Transport BV | 20,752.00 | 43,457.28 |
| Macs Maritime Carrier Shipping | 17,684.30 | 32,725.58 |
| Clipper Steel Services Ltd | 15,018.60 | 587.05 |
| China Navigation Co Pte Ltd, | 13,480.48 | - |
| Saga Welco AS | 10,283.90 | 1,669.21 |
| MSC-Mediterranean Shipping Co. | 1,106.94 | 294.46 |
| Atlantic Container Line AB | 346.06 | 142.35 |
| Others | 78,899.34 | 22,534.49 |
| Total | 303,249.23 | 443,596.13 |
| Source: Descartes-Datamyne | ||
Industrial users of aluminum, such as the auto industry, have seen their businesses fade in the face of the pandemic. Early 2020 forecasts called for more than 16 million cars to be sold in the U.S. Now the industry is saying they will sell no more than 12 million. As a result, Aludyne Inc., a global producer of aluminum chassis headquartered in Michigan, is letting go of 250 employees at locations in Michigan and Georgia.
Alcoa Corp. recently announced it would be shuttering its smelter in Ferndale, Washington, and laying off 700 workers. The aluminum giant says it’s trimming nearly half of its global smelting capacity.
The Commerce Department’s proposed rules would require importers to identify aluminum shipments’ original country of origin. The concern is that some Chinese aluminum is being sent to countries not subject to U.S. duties, where it’s melted and relabeled before being shipped to the U.S.
“The current system is a threat to the health of domestic aluminum manufacturers as the entire aluminum value chain is responding to the unprecedented impact of the COVID-19 pandemic,” said Lauren Wilk, an Aluminum Association vice president. “There is a level of gamesmanship happening.”
This isn’t the first time the U.S. has seen fit to investigate the origins of metals. In March 2019, U.S. Customs found some importers transshipped aluminum door thresholds from China through Vietnam with false declarations of origin and without depositing antidumping or countervailing duties.
Last July, Commerce slapped duties on some steel imports from Vietnam for circumventing antidumping and countervailing tariffs against corrosion-resistant (CORE) and cold-rolled steel (CRS) from South Korea and Taiwan. In 2017, Commerce hit other CORE and CRS imports from Vietnam with punitive tariffs, finding that they actually originated in China.
| US Aluminum Imports by Port in MT | ||
| U.S. Port | Q1 2020 | Q1 2019 |
| Baltimore, MD | 94,813.25 | 199,204.96 |
| New Orleans, LA | 79,355.03 | 132,629.28 |
| Brownsville, TX | 22,282.16 | 24,238.74 |
| Port Manatee, FL | 18,885.60 | 22,140.39 |
| Philadelphia, PA | 14,880.08 | 5,742.31 |
| Houston, TX | 14,797.65 | 19,997.18 |
| Galveston, TX | 13,491.62 | 0.12 |
| Port Arthur, TX | 12,728.19 | 16,482.94 |
| Mobile, AL | 11,867.26 | 12,010.62 |
| Los Angeles, CA | 10,305.46 | 1,789.60 |
| OTHERS | 9,842.93 | 9,359.99 |
| Total | 303,249.23 | 443,596.13 |
| Source-Descartes-Datamyne | ||
In the current brouhaha, it’s thought that Chinese aluminum is entering the U.S. through Mexico. Under the new North American trade deal, the U.S., Canada and Mexico agreed to stop diversion of shipments from other nations to dodge tariffs.
In December, Canada’s aluminum association complained that Mexico was acting as China’s North American backyard “to dispose of the products of its overcapacity.” The Instituto Mexicano del Aluminio has said it is helping the U.S. stop unfair trade practices, and that China accounts for less than 1% of Mexico’s primary and semi-finished imports.
But the new U.S. rules will take months to get on the books, much less enforce, too late to provide immediate help to a U.S. industry suffering from a pandemic depression.
| US Imports of Aluminum in MT | ||
| Country of Origin | Q1 2020 | Q1 2019 |
| Canada | 94,284.86 | 32,966.52 |
| United Kingdom | 49,113.76 | 221,933.97 |
| Argentina | 43,458.89 | 50,633.25 |
| South Africa | 21,738.02 | 11,063.74 |
| Norway | 20,752.00 | 16,529.52 |
| Spain | 13,480.78 | 0.29 |
| Netherlands | 12,285.97 | 237.97 |
| India | 10,675.31 | 1.45 |
| Brazil | 10,266.99 | 3,039.47 |
| Qatar | 6,432.78 | - |
| Others | 20,759.87 | 107,189.95 |
| Total | 303,249.23 | 443,596.13 |
| Source: Descartes-Datamyne | ||
