AEC Concerned Over Change in Chinese Export Duties

The Aluminum Extruders Council (AEC; Wauconda, IL) released the following statement on China’s decision to remove export duties on several downstream aluminum products, with Jeff Henderson, the AEC director of operations and director of the Council’s Fair Trade Committee, stating:

“The decision by the Chinese government to remove export duties on downstream aluminum products is troubling for the global aluminum market and is outside the scope of the World Trade Organization’s (WTO) findings on rare earths, tungsten, and molybdenum. This action represents a targeted attempt to use foreign markets to relieve pressure on China’s struggling aluminum producers.

Over the last decade, producers outside of China have made painful adjustments to market conditions by rationalizing operations, closing facilities, worker layoffs, etc. The global market, other than China, has returned to a delicate balance as a result. In China, however, producers have ramped up production and capacity for the last 15 years, regardless of what global markets could sustain. The relentless expansion of China’s aluminum industry is almost entirely responsible for global supply gluts.

Now, instead of addressing its oversupply and overcapacity problems as it should, by eliminating state support and allowing unprofitable producers to exit the market, it looks like China intends to export its problems by opening the floodgates and forcing the rest of the world to make the tough choices and suffer the impact of its misguided domestic policies.

Tellingly, this announcement did not remove export restraints on all aluminum products, but only on certain processed products. For example, the 30-percent export tax on primary unalloyed aluminum ingot remains in place. This is further evidence of strategic government intervention in trade flows to support domestic industries at the expense of foreign producers.”

www.aec.org