The 10% tariffs on imported aluminium imposed by Trump administration in March 2018 has cut down on the import, especially from China and Russia. Total aluminium import by the US dropped 10% from 2017 to 6.2 million tonnes in 2018. Japanese aluminium product manufacturers are now focusing on expanding production at their US facilities to leverage on higher domestic prices, driven by the tariffs and a tight market.

UACJ Corporation, one of the leading rolled aluminium product manufacturers in the world and the largest in Japan last year dissolved a struggling aluminium parts joint venture in the U.S. with Constellium. The company is now planning to have an independent re-entry in the strong market. The company has invested 18 billion yen in a Kentucky factory to increase production of intermediate aluminium components. Now the company is planning to make auto parts from their aluminium like the way they did under the joint venture with Constellium. UACJ expects its automotive aluminium sheet production from the US to increase 50% to exceed 1 million tonnes by 2020.

Report says Kobe Steel plans to invest about US$45.3 million to double monthly production capacity to 1,000 tons at their Kentucky plant. Kobelco Aluminum Products & Extrusions Inc., a subsidiary of Kobe Steel started production at the extrusion plant for the automotive sector in Bowling Green, Kentucky in in February 2017. The plant currently manufactures aluminium bumper and sub-frame materials. The company is also planning to build a new rolling plant that will manufacture aluminium body sheets for vehicles. Both these projects can add up the total investment to about US$907 million.

The developments were driven by the rise in aluminium price in the US after the tariffs.  Aluminium Premiums paid by U.S. buyers for the delivery of the metal rose 90% in February YoY to stand at about US$ 419 per tonne. Prices also increased for Japanese-made aluminium products, demand for which remains solid in the automotive sector despite the 10% imported tariffs. Demand is expected to grow more in the coming time for more use in BiW applications and engine parts for lightweighting and fuel economy.

The U.S. government has already granted about 80% of exemption requests for Japanese aluminium products. However, Kobe Steel and UACJ are focusing more on local production to save on transport cost and earn more profits from higher premiums.