December 23, 2015
Following the financial crisis of 2008/9 there was widespread fear that countries, feeling they were under siege in a post-apocalyptic world, would be fighting for market share and using protectionism to put up the barriers.
In reality, although there was a rise of protectionist action it was muted, particularly considering the dire position in which some countries found themselves. Perversely, it seems that low prices and a slow down in China has done what the financial crisis didn’t. Protectionist action is on the rise and even as economies slowly recover next year expect anti-dumping action across the world to get worse not better.
Protectionism Foils Rusal
Steel and aluminum have hit the headlines most this year, not surprisingly as the volumes are greatest for these major commodities and, arguably, China’s excess capacity is worst in these two metals than any other. But it is not just China that has been the subject of anti-dumping action. Brazil gratefully received news the EU was not persevering with a 17.6% levy on aluminum but UC Rusal is incensed that the European Commission turned a provisional 12.2% duty introduced in July on aluminum foil from Russia into a definitive five-year levy. That duty targets Rusal, the only Russian producer of the aluminum foil covered by the trade protection, according to Bloomberg.
Still it could have been worse, back in July there were reports the EU would impose a 34% duty on Russian foil, as Rusal is the only producer, any duty increase hits the company hard. The foil currently sold by Rusal to Europe is produced by its business units Ural Foil and Sayan Foil but there were suggestions the firm would try to get around the duty by supplying foil from it’s Armenian subsidiary.
Apparently last year Rusal produced 88,000 metric tons of aluminum foil, about a third of it went as exports to Europe and as much again to the US with the balance sold domestically within Russia. Rusal’s sales in Europe usually amount to about 24,000 mt per year, while the total consumption in the continent is 800,000 mt. Domestic foil consumption in Russia is only about 50,000 mt per year and Rusal already accounts for about 45-50%, while the rest is imported.
Tariffs on Chinese Aluminum Foil, Too
The EU has already imposed duties against China as high as 30% on some forms of aluminum with further action on stainless steel and steel products. As exporters are closed out of one market by duties, it generally increases pressure on others as producers seek to move capacity into less well-regulated markets.
Arguably, the EU is seeing action this year on steel products because the US has been so effective in countering imports from some destinations in recent years. Western markets may be picking up, but producers are still fighting for market share. Consumers need to keep a close watch on what their legislators are doing or they could find supply options closed in short order.
What Will 2016 Bring?
2016 will likely see extensive anti-dumping measures imposed across Europe and the US aimed at stemming the flow of aluminum and steel coming from China and Russia, even though the benefits to consumers and manufacturers of lower-priced product almost certainly outweigh the cost in terms of damage to domestic producers, at least in the short term.
Source:MetalMiner
