New Jersey factory linked to Chinese aluminium probe

The U.S. Commerce Department is investigating whether thousands of tons of aluminium at a factory in a Philadelphia suburb are part of an alleged scheme by a Chinese billionaire to evade tariffs by disguising the metal as shipping pallets and then remelting them for other uses.

The probe is part of a broader Commerce Department investigation into metals magnate Liu Zhongtian and his company, China Zhongwang Holdings Ltd., among the world’s largest aluminium manufacturers, according to federal documents and a department spokesman.

Mr. Liu and China Zhongwang were subjects of a Wall Street Journal article last week detailing allegations that firms linked to Mr. Liu tried to disguise the Chinese origin of large quantities of aluminium and avoid American tariffs by routing it through Mexico.

The Commerce Department is investigating whether a New Jersey company called Aluminum Shapes LLC became a separate route for Mr. Liu to evade tariffs, a spokesman confirmed.



Aluminum Shapes said it hasn’t violated any trade rules. A spokesman said the company doesn’t own the thousands of tons of Chinese-made aluminium pallets warehoused at its facilities and merely charged storage fees to the owner, who the spokesman says is a former Aluminum Shapes executive. A company spokesman said the metal was marketed for use as pallets, not to be remelted, though none of it has been sold.

A U.S. trade group has alleged to the Commerce Department that the pallets at Aluminum Shapes were imported as a way of circumventing tariffs on so-called extrusions, products made by heating and squeezing aluminium into shapes such as pipes and construction beams. Pallets, made by welding multiple extrusions together, aren’t on the Commerce Department’s list of penalized items.

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Importing so many pallets was unusual, aluminium-industry officials say. Aluminium pallets fill a niche in the U.S., limited to “specialized uses” like the relatively small airfreight market, says Dick Evans, the former chief executive of aluminium maker Alcan Inc. The pallets at Aluminum Shapes are also several times heavier than similar ones on the market—a key issue because pallets are supposed to be light to save on shipping costs.

A China Zhongwang spokeswoman said pallets manufactured by Zhongwang “are not under the scope of anti-dumping rules. Therefore, there is no such situation as circumventing tariffs.” She added that Zhongwang doesn’t have a business relationship with Aluminum Shapes.