Wednesday, November 20, 2013

What does the Threat from China Really Look Like?

AEC Past Chairman Duncan Crowdis
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 improves.

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 driven” strategy.

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 For more on the Aluminum Extrusion Fair Trade Initiative, visit

This post was written by AEC Past Chairman Duncan Crowdis

Friday, November 1, 2013

Scope Requests: A Slippery Slope Worth Defending

AEC Board of Directors Member Jeff Henderson
I’m delighted to contribute to the Aluminum Extruders Council’s blog, So far the topics have been devoted to the Chinese aluminum extrusion imports trade case with the United States. Like me, many of you have volunteered your time, energy, and resources to this case.  For those on the Fair Trade Committee, we have learned a valuable lesson: this case is not going away!  The number of hours, the attention to detail--and yes, the money--has all been much greater than we ever imagined.  Those that continue to support illegal and unfair trade practices have been persistent in their mission to find cracks in the original orders.  As a result, scores of appeals, scope requests, court decisions, and even legislative actions have pummeled our industry in an effort to find those cracks.

After nearly 18 months of defending the orders, it is clear that we have the talent, drive, and resources required to preserve the orders.  The passion and tenacity exhibited by aluminum extruders, and their suppliers, demonstrates our resolve to keep up the fight.  I am convinced that as long as the extrusion industry keeps fighting we will keep illegal and unfair imports from destroying our marketplace.  However, it won’t be easy.  We all must contribute and make our dedication known to the Department of Commerce (DOC), Chinese exporters of aluminum extrusions, and our industry. 

Over the last couple of years we have fought dozens of scope requests that seek exclusion from tariffs.  In most cases they contend the product in question is a finished kit.  The orders clearly state that a product must be shipped complete and ready-to-assemble (or already assembled) in order to be excluded.  As each scope request is debated we must consider not only the ‘product’ in question, but also the precedent the exclusion might create.  In many recent scope requests, prior exclusions have been cited by new importers’ scope requests as motivation for the DOC to exclude their product. Those that have volunteered their time to represent the industry must weigh the nature of the product requested to be excluded, the resources and funding required to fight the request, and then determine the best legal approach. To date over 90 percent of all scope requests have been challenged by the Fair Trade Committee and our win-loss record is impressive.  

However, with every request we lose or forfeit, a new precedent is established that could result in even more requests.  It is a tough call, and one that shouldn’t be complicated by funding issues.  For this reason, we must all reach farther into our budgets and find ways to contribute the monies needed to stay vigilant.

We have also taken our case to Washington DC.  It’s not enough for us to simply fight this battle through the DOC and the courts. We need to let our elected representatives know that job retention and growth is on the line. They need to actively fight for us.  Some members from the Fair Trade Committee made a recent trip to DC and spoke with the staffs of over 10 Senators and Congressmen to get their support.  Our trip was quite successful and all of these officials gave us their loud and clear support.  Now it’s time to put that support to work!  In the coming months it is critical we continue to build on all areas of support.  There are a number of issues yet to be addressed, and as we end our first annual review we must remain resolute.

For more on the Aluminum Extrusion Fair Trade Initiative, visit

This post was written by AEC Board of Directors Member Jeff Henderson of Sapa, Inc.