The Aluminum Association is the leading voice for aluminum industry in Washington, DC that promotes the production and use of aluminum as the sustainable material of choice. The Association provides global standards, industry statistics and expert knowledge to its members and policy makers. Recently, The Aluminum Association published its response on the Joint Presidential Statement by the United States and China which lays out concrete and achievable goals for addressing climate change, and in a time frame that emphasizes the immediacy of these challenges.

Heidi Biggs Brock, President & CEO The Aluminum Association shared with AlCircle the Association's perspective on the current aluminium market challenge, US-China trade policy and the US demand situation.

Excerpts from the interview:

AlCircle: Global Aluminum industry is facing a serious market challenge due to a market oversupply. What in your view are the major reasons for this situation?

Heidi Brock: Over the past ten years, Chinese aluminum production has grown at a rate unprecedented in global economic history. If you go back to 2005, China produced about 13 percent of the world’s aluminum. Today, they produce more than half. What happened was two-fold. First, as China’s infrastructure and building boom absorbed millions of pounds of metal, dozens of Chinese smelters came online to meet the demand. And second, artificial incentives, subsidies and central planning by the Chinese government have led to smelters being built even when doing so made little economic sense. In fact, a recent Reuters report indicated that, of the 50 highest cost aluminum smelters in the world, 37 are in China.

AlCircle: Does the Association hold China accountable for such a situation?

Heidi Brock: The current situation is bad for China as well as North America.

As the Chinese economy has begun to slow, and less aluminum is being absorbed domestically, there is a severe oversupply of Chinese-produced metal that shows no sign of abating. This oversupply is driving a dramatic increase of imported Chinese aluminum into the United States. According to our data, US imports of semi-fabricated aluminum products from China grew 115 percent between 2012 through 2014. Preliminary data this year suggests that this trend is accelerating.

And this is not simply free trade at work. In addition to the non-market incentives from the Chinese government, there is also mounting evidence that certain producers in China are unlawfully using the system to further distort the market. These unfair practices violate Chinese law and putting jobs at risk here at home.

AlCircle: What steps and strategies are being taken up by the Aluminum Association to ensure fair competition among global aluminum producers?

Heidi Brock: We’re focused on a few key things to ensure a level playing field where all global aluminum producers can compete in a fair and open market:

• Improve Data Transparency: All global players, including the Chinese government, should accurately track and disclose aluminum trade data in a timely manner.
• Develop GHG Goals for Chinese Production: In addition to capping coal consumption as part of a comprehensive greenhouse gas emissions reduction plan with the U.S., China should set a specific goal to limit and reduce CO2 emissions from aluminum production. This will limit pollution in China while leading to an overall reduction in global greenhouse gas emissions. China’s aluminum industry alone contributes about 1 percent of total human GHG emissions annually.
• Crack Down on Misclassification: There’s growing evidence that some players are engaging in deliberate metal misclassification to avoid relevant trade duties, unconstrained by government enforcement. This hurts North American producers and violates Chinese law. The Aluminum Association has called on the U.S. Trade Representative and the U.S. International Trade Commission calling for an investigation into these matters.
• Maintain Long-Standing Export Duties: While the aluminum industry remains committed to supporting free and open trade between countries, the current situation in the Chinese market means that certain export duties are appropriate and should remain in place while underlying issues are addressed.

AlCircle: Please brief us on the U.S-China Joint Presidential Statement on aluminum Trade Policy.

Heidi Brock: We were pleased to see the White House release a joint statement with China that laid out some concrete and achievable goals for addressing global climate change. If implemented well, China’s new cap and trade system should provide ample incentives for carbon-intensive aluminum smelters in China to be phased out. Today, China’s aluminum industry contributes about 1 percent of total human greenhouse gas emissions annually, and would be the world’s 16th highest emitter if it were a standalone country. We welcome China’s commitment to a cleaner manufacturing future and believe that aluminum can be part of that solution – in creating more fuel efficient vehicles, buildings and packaging. But it’s important that this metal be produced sustainably.

AlCircle: What is your take on a recent call for the removal of 15 percent tax on primary aluminum exported from China?

Heidi Brock: A unilateral removal of these long-standing export duties would be a mistake that would not only hurt the global aluminum market but also further incentivize the export of energy-intensive products – something that benefits neither the U.S. nor China. The Chinese government, which relies heavily on imported bauxite, has long applied export taxes on primary aluminum as part of a broader strategy to discourage exports of energy-intensive products and emphasize sustainable, quality growth. Removing the duty would create unneeded pollution in China and contribute to global greenhouse gas emissions. It would also have unforeseen – and potentially very damaging – impacts on the global aluminum market.

AlCircle: Is the Aluminum Association contemplating any trade case against China in the recent times?

Heidi Brock: While the Aluminum Association is not currently engaged in an active trade case against China, such an action in the future is certainly a possibility. The US-China trade relationship and environmental policies are very active topics of conversation amongst the leadership of the association, and with the U.S. government – trade investigations and cases included. We are hopeful that we can find some common ground between the U.S. and Chinese government to address these issues to mutual benefit. That said, all options remain on the table.

AlCircle: Please brief us on the Congressional Aluminum Caucus and what are its agenda for the US aluminum industry?

Heidi Brock: In August of 2013, the U.S. House of Representatives formed the Congressional Aluminum Caucus. The Caucus was founded by Representatives Larry Bucshon (R-IN), Suzan DelBene (D-WA) and Bill Johnson (R-OH) in 2013. Representative Dave Loebsack (D-IA) joined earlier this year as the fourth co-chair. Currently, the caucus has 41 members from both political parties.

The purpose of the caucus is to elevate awareness of the U.S. aluminum industry and every aspect of the metal’s production and use – from mining to manufacture to recycling. The caucus is focused on telling this story and educating key audiences on Capitol Hill and Inside-the-Beltway about critical issues facing the industry.

The Aluminum Association provides ongoing communications to the leaders of the caucus, including flagging relevant news stories on the industry or alerting caucus members to upcoming legislative agenda items. This year, the Association worked with members of the caucus on a Toxic Substance Control Act (TSCA) reform item important to aluminum producers. And most recently, the caucus hosted a briefing with Association member companies to discuss issues surrounding aluminum production in China.

AlCircle: We see a steady demand growth for aluminum in Association's Aluminum Statistical Review. Do we get to see a better market picture for aluminum in the coming days?

Heidi Brock: Despite some of the clear challenges in the market today, big picture, the aluminum industry story is very encouraging. Like many industries, particularly in manufacturing, we saw a significant drop off in demand following the economic downturn of 2008 and 2009. We’ve seen steady growth since then, and, today, our demand profile is back on the rise in a big way. Last year, domestic aluminum producers shipped 25.5 billion pounds of metal in the US and Canada for the first time since the mid-2000s. That represents more than 35 percent growth in shipment volumes compared to the trough of the recession in 2009. Demand today is approaching the record levels we haven’t seen since the mid-2000s.

A lot of this industry growth is being buoyed by increasing use of aluminum in the automotive and transportation sector. In fact, use of aluminum in transportation has nearly doubled since 2009. What that’s meant for us in terms of investment is huge. Already, this is an industry that supports nearly 678,000 direct, indirect and induced jobs in the United States alone and generates $154 billion in economic impact – about 1 percent of domestic GDP. And since 2013, Aluminum Association member companies have announced U.S. plant expansions and planned investment totaling more than $2.3 billion and creating more than 1,000 permanent and temporary jobs. Not a lot of U.S. manufacturing industries can point to that kind of growth and we’re greatly encouraged by that.

Disclaimer: “The information presented herein is neither intended nor implied to be a substitute for professional advice. The views and opinions shared in the interview section of www.alcircle.com are unique to the interviewees and do not necessarily reflect the viewpoint of www.alcircle.com.”