Cheap Chinese aluminium exports cause threat to Vietnamese aluminium industry

AL Circle

Semi-finished aluminium export from China is creating concern among other south Asian countries as well.  Vietnamese aluminium producers fear cheap aluminium products imported from China would make their domestic products un-competitive.  

Nguyen Hong Linh, owner of an aluminium manufacturing firm in Hanoi, said he has not been able to expand despite having the capital as he is not sure of the profitability. He said that, his company along with other aluminium manufacturers have been cutting production capacity since the beginning of 2018 as their products seem uncompetitive in front of Chinese imports. Some industry players, as shown by media reports are operating at only 30-40 per cent of capacity.

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Vu Van Phu, chairman of Hanoi company Fran Alumi, said that locally made aluminium has to go through more quality inspections than Chinese imports.  The input value added tax (VAT) refund for Chinese products has been hiked from 9 per cent to 13 per cent since September to add more trouble to domestic producers. The higher tax refund means Vietnamese manufacturers are unable to compete on price with the Chinese products. The flood of export is primarily driven by the trade war with the U.S.

The U.S. International Trade Commission (ITC) has slapped AD and CVD on common alloy aluminium sheet products from China after an investigation report that the import of Chinese products has harmed American producers. To substitute the export, China may divert its products to neighbouring markets including Vietnam.

Data shows that Chinese products account for 30 per cent of Vietnam’s aluminium imports, a figure which has tripled in the last two years. Imports from other markets like Germany and Taiwan account for only 2 per cent of the import.

Linh fears that if the U.S. and China cannot come to a solution on the trade war after the 90-day trade truce, U.S. might impose higher tariffs on China, and “China could seek to export its aluminium via Vietnam to the U.S." The entire industry is concerned that Vietnam could become China’s dumping ground for cheap metals and scrap.

Last year customs authorities had to curtail the imports when large volumes of Chinese aluminium flooded into Vietnam. The Trade Remedies Authority of Vietnam is investigating if Chinese aluminium is hurting Vietnamese producers.

Nguyen Trung Tien, head of the General Statistics Office’s trade statistics department, said authorities would intervene to preclude this trend. A spokesperson for the Vietnam Aluminum Association also said they are working on finding a solution to dumping from China.

The spokesperson added that local manufacturers need to improve their technology and optimize manufacturing to reduce prices and compete with the Chinese.

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