“Aluminium demand in Europe will continue to be driven by growing demand in many applications despite trade challenges” ~ Gerd Götz, Director General of European Aluminium

European Aluminium, founded in 1981 and based in Brussels, is the voice of the aluminium industry in Europe. Its 80+ members include primary, downstream and recycling producers with more than 600 plants in 30 european countries. Gerd Götz has been Director General of European Aluminium since 2013. Gerd has held different managing roles in public affairs, corporate communications and brand management in Berlin, Hamburg, Brussels and Amsterdam. As the brand ambassador of  European Aluminium Gerd has put forward the viewpoint of the association on a number of issues that are impacting the global aluminium sector in 2019: 

Q: Please give us a heads up on the aluminium ecosystem in Europe?

A: We see a mixed picture, with strong performances in our key markets. Primary aluminium production in Europe (EU28+EFTA) however slightly decreased from 4,3 kilotonnes in 2017 to 4,2 kilotonnes last year. This decrease reflects the considerable external pressures on the aluminium supply chain caused by global trade issues, which impacted the alumina and the primary smelting production.

On the other hand, the production of flat-rolled products increased from 5,1 kilotonnes in 2017 to 5,3 kilotonnes in 2018. The growing demand was driven mainly by transport - particularly automotive - and packaging. Together, both markets represent more than 60 percent of the flat-rolled product market.

Extruded products showed an equally strong increase from 3,1 kilotonnes to 3,2 kilotonnes. This was principally driven by strong growth in transport – again, particularly automotive – industrial sectors, and the continuing recovery in the building and construction sector in several European countries.

Q: European Aluminium expects that Europe should be the next to be exempted from 10% tariff on aluminium products. Are you expecting an exemption by the end of 2019?

A: We’ve said from the very beginning that the tariffs are unjustified– the EU has always been and remains an important ally of the U.S. and a trusted and stable supply source for aluminium. We are very concerned that these unjustified tariffs put at risk the many industrial clusters, innovation hubs, and transatlantic synergies we share with the U.S.

Whether or not the U.S. will grant an exception by the end of the year remains to be seen. We support the European Commission’s negotiation position to lift the Section 232 tariffs as a pre-requisite of any trade deal with the U.S.

Q: Have the 10% tariffs on aluminium negatively affected the European aluminium trade in 2018? How are they going to impact the market in 2019?

A: No, the exports to the U.S. did not dent because the U.S. does not have enough domestic production to satisfy demand and therefore continued to import aluminium from Europe and other regions despite the tariffs. We expect this trend will continue throughout the year. However, it is still too early to assess the impact of the redirection of aluminium products to Europe from third countries affected by the tariffs. It will still take some months until we have a clearer picture.

Q: Do you think protective trade measures can improve the aluminium sector in the US?

A: In short: no. Unilateral actions cannot induce the systemic change that is needed. Protectionism and uncertainty are not beneficial to our industry; they cause price volatility and disrupt value chains. It’s the other way around: We must work together to make the WTO better equipped to deal with a global economic power based on a state economy such as China. The fact that the existence of structural overcapacities is not seen as a valid argument to allow for action by member countries exemplifies this. We, therefore, support the OECD’s suggestion and the EU’s ambition to modernise and make the WTO more effective through introducing more transparency, creating and reviewing rules and disciplines and ensuring a better enforcement mechanism.

If we do do not take action, competing materials will take advantage of the turbulence in our industry and fill the gap.

Q: What is your view on the proposed 25% tariffs by Trump on vehicle and auto parts imports? How do you think it is going to affect the European auto sector?

A: The automotive and transport sector is one of our main customers and accounts for around one-third of all aluminium shipments in Europe. Any measure that would reduce car production in Europe would have a negative impact on aluminium demand.

Q: What are the sustainability targets for European Aluminium in 2019 and ahead?

A: Our members are bound to ambitious targets and commitments set out in our “Sustainability Roadmap Towards 2025”. These go far beyond legislative obligations and reflect the industry’s forward-thinking attitude and commitment to action. We realised the importance of articulating a clear vision for the future of the industry. It provides a framework for company members to articulate their own sustainability strategy.

And just a few months ago, we developed our Vision 2050, a data-driven vision for the whole value chain, assessing how much our sector can contribute to the EU low carbon strategy by 2050 and the conditions necessary for the sector to realise its full potential.

We found out that total CO2 emission reductions in the primary aluminium production could reach up to 70% and major additional decarbonisation gains are expected from increased recycling. To achieve this vision, we need a strong push for increasing the share of aluminium recycling while preserving our primary production in Europe.

Also, we carried out an in-depth analysis of the United Nations Sustainable Development Goals and identified eight goals where the aluminium industry should focus on maximising its ability to change and build business opportunities. These goals are aligned with four priority areas that cover the most significant topics for European Aluminium: decarbonisation, circular economy, skills and education, and collaboration for innovation.

I see our industry well positioned for Europe’s transition to a low carbon economy and also to become – thanks to the permanent properties of our material - a leader in the evolving new economic system called the circular economy.

Q: What is your view on China’s state subsidy and aluminium overcapacity? How do you think it is going to impact the global aluminium industry in 2019?

A: China’s state-subsidised overcapacity is the number one issue faced by the rest of the aluminium world. If we do not defend ourselves against unfair competition, Europe risks losing a strategic industry vital to its transition to a low carbon economy. Our strongly interlinked value chains could start to disintegrate. Research and innovation may take place elsewhere. All this with the consequence that hundreds of thousands of jobs are at risk.

The European aluminium industry has been very vocal about this issue for many years. We are very appreciative of the OECD’s recent report “Measuring distortions in international markets: The aluminium value chain” which identifies fact-based evidence concerning the root causes of these significant distortions.

Q: As a representative for the European aluminium industry, how is European Aluminium lobbying for the causes that are affecting in global supply chain?

A: We advocate by creating a long- term vision for the future of our industry in collaboration with our main stakeholders, including policymakers, NGOs, and of course, our members. When we present our policy asks to policy makers, we always ensure we provide them with the most accurate data and insights from our membership experts to substantiate our arguments. In addition, we build consensus within the aluminium sector at national and European level by engaging national associations. We also align with our counterparts in the U.S., Japan, Canada, Mexico, and Brazil when it comes to important global issues such as trade.

Q: What is your outlook for the global aluminium sector in 2019?

A: We expect that trade issues will remain a key challenge for the global aluminium sector. Meanwhile, aluminium demand in Europe will continue to be driven by growing demand in many applications despite trade challenges at European and global levels.