b'1.8 The India aluminum paradoxWhy exports and imports are both seeing healthy growthTrade tensions between the United StatesIndian aluminum represents only 1.25% and India have been on the increase of late,of U.S. imports of the metal, but six percent Peter Buxbaum, AJOT thanks primarily to the trade policies of theof Indias exports. South Korea, Turkey, Mex-This article was originally published onTrumpadministration.Somerecentlyre- ico, Italy, and Japan are Indias other major May 13, 2019 in issue #688 leased numbers show the extent to whichaluminum customers, together with the U.S. suchpoliciescanandcannotinfluencebuying 65% of Indias exports. bilateral trade patterns.India was able to increase its exports of This is a story about the trade in steel andaluminumthankstotwounusualcondi-aluminumbetweentheU.S.andIndia tions. First, there existed a large surplus in mostly aluminum. The numbers show thatdomestic aluminum stockpiles, and, second, Indias steel exports to the U.S. fell by 49%global aluminum supplies became scarcer last year while exports of Indian aluminumthanks to the turmoil caused by the Trump to the U.S. went up by an impressive 58%. tariffs as well as sanctions on aluminum pro-ducers such as Rusal.The steel part of the statistic is easy to un-derstand. President Donald Trump imposedAt the same time, Indias imports of alu-an across-the-board 25% tariff on steel im- minum also grew mightily. In 2018, Indias ports, with some exemptions, making Indianaluminum imports, including scrap, grew to steel more expensive in the United States.nearly two-million metric tons, continuing But Trump also slapped a 10% tariff on alu- a growth trend of 12% per year on average minum imports. So why, then, did importssince 2011. Imports claimed a 54% share of of aluminum from India increase, let alonethe countrys total aluminum consumption by so much? And does it make sense thatlast year.Indias imports of aluminum have also been [chart 1.8] increasing? Lower Production CostsIndias Aluminum Export Boom India is one of the cheapest countries in the world to make aluminum thanks to the Theanswerliesintheparticularcondi- governments support of upstream produc-tionsofthealuminumindustryandtradeers, allowing them to double output since inIndia,includingthespecificneedsof2010. At the same time, aluminum prices in domestic aluminum users. First, its import- India are around 14 percent above London anttonotethatIndiasaluminumexportsMetal Exchange (LME) prices, providing in-have been growing prodigiously for severalcentive for downstream aluminum users in yearsto the entire world and not only theIndia to import the material they need. LME U.S. They leapt by nearly 16% during thealuminum prices have been falling of late, second quarter of this year and by over one- having peaked in April 2018 at $2,600 per third in 2018increasing by 440,000 metricton and since sinking to the $1,800 per ton tons to reach 1.66 million metric tons. Fromrange. Prices have not crossed the $2,000 2015 to 2017, Indias aluminum producersper ton mark since late October 2018.exports rose by a whopping 83%. 18 THE UNCONTAINED www.theuncontained.com'