The Aluminum Extruders Council (AEC) has led the U.S. aluminum extrusion industry in achieving level competition by winning tariff protection that offsets unfair trade practices of extruders/importers of aluminum profiles produced in China. Our efforts have been of enormous value to domestic extruders and suppliers. Conservatively, an estimated 800 million pounds per year of extrusions are being produced in the U. S. that would have otherwise been lost to China.
Many are questioning whether the recent drive by the Chinese
Extrusion Industry to export products off-shore, and particularly into the
North American market, is a long term play or simply a temporary solution to
satisfy a short term supply-demand imbalance while their domestic demand
It’s a great question and once you look at the data there is
an obvious answer and it is about supply and demand. Clearly the domestic
industry has been expanding its capacity well beyond the requirement to supply
domestic needs within China.
First of all let’s consider the domestic demand in China for
aluminum extrusions. In looking at the trend over the past decade, it has been anything
but anemic. With domestic GDP running well into the double digits over this
period, the demand for aluminum extrusions in the Transportation and Building
and Construction industries alone have been able to support a significant
increase in domestic capacity. So an increase in domestic capacity was
necessary. However as you will see below, the domestic industry has been
building capacity well beyond the rate at which demand has been escalating. And
it is highly unlikely given the current robust domestic demand trends, that the
Chinese industry is building capacity to significantly exceed what the industry
has been experiencing.
The next part of the equation is the supply or capacity
side. Based on research by the U.S.
International Trade Commissions (ITC) as part of the original fair trade case,
the Chinese domestic industry isn’t a lot different than the North American
industry, it’s just much larger. In terms of size, the ITC discovered that the
production in 2009 was just over 18 billion lbs. which is close to 4 times the
size of the U.S. industry. Similar to North America, the Chinese industry is
also fragmented with over 700 extruders making up the 18 billion lbs. of production
capacity. They have their “big dogs” as well, with 15 companies with more than
220MM lb. of production capacity and the largest one, Zhongwang, at 1.4 billion
lbs. Other than overall size, the big difference with our industry is the
magnitude of their expansion plans. In 2010, at the time of the ITC study, there
were 40 expansion projects on-the-go, which will add another 10 billion lbs of
capacity or an increase of almost 60 percent.
That’s right 10 billion lbs., more than twice the total
capacity of the US industry!
That will take them to over 28 billion lb. of capacity. Zhongwang continues to lead the show with “incremental”
capacity that will take them to a total of 1.8 billion lbs. When a Chinese extruder
expands, it isn’t like in the U.S. with the addition of a press or two. As an
example, the ITC discovered that the Haomei Aluminum Company is expanding by adding
450MM lb. of capacity over a three-year period. This size of expansion is
relatively common place with the capacity growth that we are seeing.
Exports from China increased over 10 fold since 2001 and
were estimated at 1.5 billion lbs. at the end of 2007. Very little of this went
into the US. That all changed in late 2008 and through 2009 as windows into
other markets such as Canada and Australia started to close due to new duties on
extruded aluminum imports from China being applied by those countries. That was
the time when we started to see the impact of what was clearly an “export
So clearly the Chinese industry is expanding its capacity well
beyond any thought that it will be absorbed by future increases in domestic
demand. Their expansion plans will take their capacity upwards of 28-30 billion
lbs., almost enough to supply the world demand. It is for this reason that the
ITC found that, not only was the U.S. domestic industry being harmed by the
influx of illegal Chinese imports, but that the infrastructure that is
currently being built in China is a Clear and Present Danger to the future
of our industry.
If there is any question about the ability, the
where-with-all and the strategy of the Chinese industry in terms of exports,
the math should make it clear. If we want our industry in North America to
survive, we MUST stay the course and fight for Fair Trade practices.
FAIR TRADE: It Matters!
To get involved, contact Rand Baldwin, President
of the Aluminum Extruders Council at email@example.com.
For more on the Aluminum Extrusion Fair Trade Initiative, visit www.aecfairtrade.org. This post was written by AEC Past Chairman Duncan Crowdis
Well, our year is off and running with a bang. Scope issues, Administrative Review, and circumvention top our list in early 2018.
This month we learned that there will be an appeal in the curtain wall scope case. Permasteelisa and Jangho filed a notice of appeal last week. It is expected that Yuanda will almost surely file their own notice of appeal by the deadline, which is February 12. The Chinese industry signaled that they would appeal in a recent article in US Glass magazine.
Additionally, our scope challenge related to door thresholds continues to move forward. This is a significant case because door thresholds are expressly mentioned as subject merchandise in our trade orders. So, to lose this application could open the door to many applications clearly covered by our case. Finally, we continue to await the judges’ (there are more than one judge at the CIT) decision in the appliance handles cases we defended last fall. We believe we will win. However, we are mostly i…
The agenda for our trade case continues to be driven by transshipment/circumvention issues and the 232 Investigation. Meanwhile, our ‘base case’ is so quiet that we’ve been able to free up budget dollars from the Administrative Review to finance our circumvention case against Vietnam.
The Administrative Review is now complete. The final rates determined by the Department of Commerce are 86% for countervailing duty (CVD) and 16% for anti-dumping duty (AD). The total of 102% is our highest rate since we first filed the case.
Scope issues have calmed down a lot. In fact, only the curtain wall case, the appliance handles case, and door threshold cases are on the front burner. Reports from the hearing for the curtain wall case were very positive. The attorney leading that effort, David Spooner, is quite confident we will win this round. Of course, we fully expect another appeal from the Chinese. We are awaiting the decision from the judge in the appliance handle cases and believe w…
Our 6th Annual Administrative Review results have been announced. As previously reported, the Department of Commerce (DOC) maintained extrusion tariffs at 86.01% for our subsidy, or countervailing duty (CVD), case and 20% for our anti-dumping (AD) case. The combined duty of 106% has been stable since 2016. This is a good number for the industry, which continues to contain Chinese aluminum extrusion at less than 1% market share. Furthermore, the DOC also assigned the Adverse Facts Available (AFA) rate of 198.61% to the two mandatory respondents, Liaoning Zhongwang Group Co., Ltd. and Liaoyang Zhongwang Aluminum Profile Co. Ltd., which has been the AFA rate since the 5th review. The 7th Annual Administrative Review has begun with the selection of mandatory respondents.
Elsewhere in our case, there is nothing new to report on the scope issues we are battling. We continue to wait for court dates or decisions depending on the matter. Our trade enforcement actions and results have ma…