US and Canada Tariff Increases to Take Effect, Potentially Restricting Q4 Aluminum Semis Exports [SMM Analysis]

According to the latest data from the General Administration of Customs: In September 2024, China's exports of unwrought aluminum and aluminum semis reached 562,000 mt, down 5.4% MoM, up 19.2% YoY; cumulative exports from January to September totaled 4.913 million mt, up 15.5% YoY. In September, domestic aluminum semis exports decreased by 32,000 mt MoM, mainly due to the implementation of tariffs by the US and other regions on Chinese aluminum semis, leading to a cautious sentiment in the overseas aluminum market and reducing some restocking.

News Recap: On September 27, the US Department of Commerce made a final ruling that producers from 14 countries, including China, Colombia, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, South Korea, Taiwan, Thailand, Turkey, the United Arab Emirates, and Vietnam, violated international trade rules, imposing anti-dumping duties ranging from 2.02% to 376.85% and countervailing duties from 1.44% to 168.81%. According to media reports, aluminum solar mounting rails are included in the relevant product categories, but imported solar module aluminum frames will not be affected by these trade tariffs.

The aluminum extrusion products involved in this anti-dumping and countervailing investigation mainly include various types of aluminum extrusions, such as frames, rods, and strips, widely used in construction, transportation, machinery, electronics, and other fields. The products involved are classified under the following US Harmonized Tariff Schedule numbers: 7604.10.1000, 7604.10.3000, 7604.10.5000, 7604.21.0000, 7604.21.0010, 7604.21.0090, 7604.29.1000, 7604.29.1010, 7604.29.1090, 7604.29.3060, 7604.29.3090, 7604.29.5050, 7604.29.5090, 7608.10.0030, 7608.10.0090, 7608.20.0030, 7608.20.0090, 7610.10.0010, 7610.10.0020, 7610.10.0030, 7610.90.0040, 7610.90.0080. The US tariff list includes aluminum products such as unwrought aluminum (7601), aluminum bars, rods, and profiles (7604), aluminum wire (7605), aluminum plate/sheet and strip (7606), aluminum foil (7607), aluminum tubes (7608), and aluminum tube fittings (7609). According to customs data, the total volume of aluminum semis and products directly exported from China to the US in 2023 affected by these tariffs was approximately 241,000 mt, with an export value of about 880 million US dollars. The imposition of these tariffs has led to increased risk aversion among some aluminum semis export enterprises, who are now cautious about taking orders from the US to avoid unnecessary tariff risks due to classification errors.

Additionally, on August 26, Canadian Prime Minister Trudeau announced that starting October 1, a 100% tariff will be imposed on electric vehicles from China; starting October 15, a 25% tariff will be imposed on steel and aluminum products from China. The Canadian Ministry of Finance also issued a notice of intent to impose additional tariffs on Chinese steel and aluminum.

Overall, the implementation of tariffs by the US and Canada on Chinese aluminum semis may impact the total domestic aluminum semis exports in Q4. However, considering the main export countries for domestic aluminum semis in recent years are Southeast Asian and Middle Eastern countries, with the US and Canada accounting for a decreasing share, exploring new overseas markets has become a new direction for Chinese aluminum semis export enterprises. Given the current high cost-effectiveness of domestic aluminum semis exports, the tariffs from these two countries may lead to a slight MoM decline in China's aluminum semis export volume, but with the LME outperforming SHFE in Q4, domestic aluminum semis exports are still expected to grow by about 10% YoY, with the total annual export volume possibly reaching around 6.4 million mt, up approximately 13% YoY.