October 27, 2016 07:59:02 AM
ALBANY (Scrap Monster): Two US Senators have written a letter to the US Trade Representative, stating that the country should initiate a case against the alleged over-subsidization of aluminum industry by the Chinese administration. The letter was written to Michael Froman by Senators Rob Portman and Sherrod Brown from Ohio. It blames China for global excess aluminum capacity.
The Senators pointed out that China has challenged fair trade principles through unfair subsidization of the sector and dumping of cheap products to global markets including the US. This has resulted in significant damage to the US domestic aluminum manufacturing industry. Over the past 10 years, nearly 15,000 production workers have lost jobs in US aluminum sector. During 2016 alone, the industry has reported nearly 1,500 job losses. The letter urged US administration to act immediately so as to prevent any further layoff in the sector. It also called for necessary government support for affected workers and communities.
According to the letter, investigations have unveiled several programs sponsored by the Chinese government that subsidize aluminum extruders. The primary aluminum producers in that country enjoy significant favors from the administration including cut in energy bills and cash infusion of millions of dollars. Surveys have shown that most of the state-owned aluminum smelters run in losses, but are still producing more primary aluminum, only because of unconditional support and incentives from the government.
The rise in production coupled with slowdown in domestic demand has resulted in increased exports from the country. The cheaper Chinese aluminum products are dumped to almost all major markets across the globe. The excess supply has led to sharp decline of nearly 35% in aluminum prices.
Rob Portman and Sherrod Brown noted that US aluminum industry is still competent enough to win any competition on a level-playing field. They reminded that US aluminum manufacturers are still the best in the world. They called upon the authorities to effectively enforce the country’s trade laws to protect the aluminum manufacturing industry and the hundreds of thousands of jobs that are being supported by the sector either directly or indirectly.
Meantime, monthly production data released Wednesday by the Chinese Statistics Bureau indicates that the country’s aluminum output surged to the highest level in fifteen months during September this year. The production totaled 2.75 million tons, marginally higher by 1.2% when matched with the same month a year before. Sources indicate that the sudden jump in production is mainly on account of many shuttered smelters returning to production to take benefit of the rally in aluminum prices. The excess supply is expected to arrest the rally in prices.
Incidentally, the Chinese aluminum production during the initial nine-month period of the current year has dropped marginally by 1.4% year-on-year to 23.44 million tonnes. The country exported 3.47 million tons of aluminum ingots and profiles worth $8.99 billion, said latest statistics released by the Chinese General Administration of Customs.