Protectionism rises as govts seek to help aluminium and other metal manufacturing

Protectionist action is clearly on the rise and even as economies slowly recover next year anti-dumping action can be surely expected to get worse not better across the world.

Aluminium along with other industrial metals have hit the headlines most this year, not surprisingly as the volumes are greatest for these major commodities and, arguably, China’s excess capacity is worst in these two metals than any other. But it is not just China that has been the subject of anti-dumping action. Brazil gratefully received news the EU was not persevering with a 17.6% levy on aluminium but UC Rusal is incensed that the European Commission turned a provisional 12.2% duty introduced in July on aluminium foil from Russia into a definitive five-year levy. That duty targets Rusal, the only Russian producer of the aluminium foil covered by the trade protection, according to industry watchers.

Back in July this year, there were reports the EU would impose a 34% duty on Russian foil, as Rusal is the only producer, any duty increase hits the company hard. The foil currently sold by Rusal to Europe is produced by its business units Ural Foil and Sayan Foil but there were suggestions the firm would try to get around the duty by supplying foil from it’s Armenian subsidiary.

Apparently last year Rusal produced 88,000 metric tons of aluminium foil, about a third of it went as exports to Europe and as much again to the US with the balance sold domestically within Russia. Rusal’s sales in Europe usually amount to about 24,000 mt per year, while the total consumption in the continent is 800,000 mt. Domestic foil consumption in Russia is only about 50,000 mt per year and Rusal already accounts for about 45-50%, while the rest is imported.

Tariffs on Chinese aluminium foil

The EU has already imposed duties against China as high as 30% on some forms of aluminium products. As exporters are closed out of one market by duties, it generally increases pressure on others as producers seek to move capacity into less well-regulated markets.

What is expected of 2016?

2016 will likely see extensive anti-dumping measures imposed across Europe and the US aimed at stemming the flow of aluminium coming from China and Russia, even though the benefits to consumers and manufacturers of lower-priced product almost certainly outweigh the cost in terms of damage to domestic producers, at least in the short term.