Companies should prepare for possible import tariffs: Chinese expert
Experts said Chinese aluminum companies should make preparations after the U.S. International Trade Commission (USITC) said on Wednesday (U.S. time) that it will investigate the industry.
The USITC said it will investigate the global aluminum trade and its impact on the aluminum industry in the U.S., an inquiry that could help pave the way for new import tariffs, the Wall Street Journal (WSJ) reported on Wednesday.
Song Hong, a research fellow at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that Chinese companies should take this news as a warning and make precautions to avoid losses if the U.S. really does take action.
"The report is part of a complaint process that might end up in anti-dumping measures such as imposing import tariffs on goods from other countries," Song told the Global Times Thursday.
The USITC said it would look into foreign government policies that drive overproduction, which has drastically increased the output of the metal since 2000, resulting in falling prices and closures of U.S. smelters.
The Chinese Ministry of Commerce did not reply for comment as of press time.
Chinese aluminum exports soared to $23.8 billion in 2015 from $6.2 billion a decade earlier, helping prices to fall 40 percent in the past five years, to $1,500 a metric ton from $2,500 a metric ton, according to the WSJ report.
In 2015, China produced 32 million tons of the metal, accounting for more than 50 percent of global aluminum production, double the level in 2005, the WSJ report said.
An industry insider told the Global Times Thursday that as far as he knows, the exports of aluminum bars to the U.S. don't have any price advantages, citing China's comparatively higher energy price.
China's aluminum industry is itself troubled by overcapacity. But exports have only a limited effect in relieving the overcapacity problem, so more efforts should be made on the domestic front, Song said.
In 2015, the industry cut total production capacity by about 5 million tons, said media reports.
Song said the loss of jobs in the U.S. aluminum sector has been caused by many factors.
"Reasons could be the business decisions of multinational companies to relocate production worldwide and technological advancement," Song said.
