WCA July 2016

From the Americas

Closed, idled, at-risk USA smelters There is no denying that American and other aluminium firms are restructuring and cutting back on production in current conditions of imbalance in global supply and demand. In what it describes as an efficiency initiative, Alcoa, the foremost American aluminium producer, has announced the closing of a series of domestic smelters as it relies more heavily on production in Canada, Iceland and Saudi Arabia. At the same time, Canadian and other smelters have stepped up shipments of raw aluminium to the United States. “In states all across the country, America’s aluminium producers have closed, idled or are at risk,” said USW international president Leo W Gerard at the time of the ITC filing. “In 2011 there were 14 smelters in the United States. Today there are only eight, of which only five are currently operating. [One of these was expected to be idled by the end of June.] Two of the five now operating are at 50 per cent or less of capacity.” For its part, China – whose exports to the United States are an important source of domestic employment – professes innocence of wrongdoing. While its own customs figures show a jump in exports of aluminium of more than 27 per cent over the past two years, the government-affiliat- ed China Aluminium Association takes the position that an increasing need for aluminium in high-speed railway equipment, aerospace and electronics justifies an expansion in Chinese production capacity and an incidental rise in exports.  Section 201 cases are not easy to win, requiring proof not merely of injury but of “serious injury” to a domestic industry from imports; and even if it prevails the USW case would take some time to produce any real effect. Meanwhile, presidential aspirant Donald J Trump’s populist appeals for tougher USA trade policies, including a steep tariff on goods from China, attracted attention in China this spring. During a visit to Washington in April, Chinese finance minister Lou Jiwei told the Wall Street Journal that the imposition of such a tariff would violate World Trade Organization rules. In tandem to the tensions over aluminium, low-priced Chinese exports continue to roil the steel market A senior official in the China Iron & Steel Association (CISA) has rejected the charge that China bears any special responsibility for the over-supply of steel in the world. Speaking to the Wall Street Journal on the sidelines of an industry conference held in Hong Kong in April, Li Xinchuang, the vice secretary general of the China Iron & Steel Association (CISA), claimed that overcapacity in the steel industry is a global phenomenon. “It is not only a situation in China,” said Mr Li. “We have both good quality and price. It is not about price alone.” Steel

He further told the WSJ ’s Asia correspondent Biman Mukherji that China would hit back at any increase in tariffs on its steel exports imposed by other countries. Said Mr Li, “We are against anti-dumping action and we will take measures.” (“China’s Steel Body Sees Red Over Tariff Measures to Stall Exports,” 6 th April) In March, the US Department of Commerce imposed preliminary duties on imports of cold rolled steel, used extensively to make auto parts, from seven countries including China, whose steel imports received a 265.79 per cent tariff. India last year raised import taxes on steel by five percentage points to 12.5 per cent on flat products and 10 per cent on long products. It also added a temporary 20 per cent “safeguard” duty on hot rolled coils after local producers claimed to have suffered damage from cheap imports.  On 19 th April it became apparent that China is doubling down on its disavowal of responsibility in the matter of steel over-supply. One day after the major steel-producing countries, meeting in Brussels, acknowledged failure to come together on a remedy, a spokesman for China’s Ministry of Commerce betrayed some exasperation. “China has already done more than enough [to reduce capacity in its steel sector],” Shen Danyang told reporters in Beijing. “What more do you want us to do?” The reference would have been to the 2.3 per cent cutback in Chinese steel production (to 803.8 million metric tons) last year, the first drop since 1981. According to Reuters, the current drive by Beijing to cut industrial capacity will force China to lay off some 1.8 million coal and steel workers. The central government will allocate $15.5 billion to cushion the effect of the job losses and to discharge debt. Elsewhere in steel  As reported in the Northwest Indiana Times (1 st April), the Korean steel producer Posco is seeking final local approval and property tax abatement for a new 120,000-square-foot wire rod processing plant in the Port of Indiana-Jeffersonville. The $19 million project – a joint venture with JP Steel, also Korean – would be Posco’s second USA plant. Kyu Tae Kim, the company’s finance director, said the plant would supply its automotive customers on a just-in-time (JIT) delivery basis.  The Posco announcement came a day after Delaware-based Nuco Steel Bar Technologies said it was investing $36.9 million to build a 150,000ft 2 bar mill in Valparaiso, Indiana. Construction was to begin in May, with completion set for sometime in 2017. Target sectors are automotive, agricultural, hydraulic, and tool manufacturing. As noted on thesteelreport.com (29 th March), Nuco claims to be building “the most advanced cold draw bar mill in North America,” with continuous processing capability.

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Wire & Cable ASIA – July/August 2016

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