Aluminum Overcapacity Targeted

U.S. Sens. Rob Portman (R-OH) and Sherrod Brown (D-OH) have urged the U.S. Trade Representative (USTR) to bring a World Trade Organization (WTO) case against China in an effort to address aluminum overcapacity.

“Exponential growth in China’s aluminum sector, fueled by heavily subsidized, government-directed lending, has had significant implications for the U.S. aluminum industry,” contributing to the loss of 15,000 aluminum production jobs in the past decade, including 1,500 this year alone, the senators wrote to USTR Ambassador Michael Froman on Oct. 21, according to a jointly issued press release.

“China has unfairly subsidized its aluminum industry – it’s not competing, it’s cheating,” Brown stated in the release. “Enforcing our trade laws will ensure that U.S. aluminum manufacturers, the best in the world, have the opportunity to compete on a level playing field.”

Each year since 2008, China has increased capacity and production beyond what its domestic market demands, prompting a 35 percent drop in global aluminum prices, according to the letter to Froman. “With significant government support, Chinese companies are allowed to operate at losses or otherwise independent from market considerations,” the senators wrote.

A panel of recycling industry representatives addressed concerns about the aluminum market, including the “significant decline in aluminum scrap activity,” at the ISRI Commodities Roundtable 2016 in September, Recycling Today reported in a story about how aluminum struggles with overcapacity.

Panelists shared steps that scrap metal recyclers could take to lessen their exposure to the volatility in the aluminum markets as well as forecasts of market conditions. Though long-term issues remain, aluminum scrap prices could get a short-term boost if inclement weather causes shortages and auto shredders scale back operations as ferrous prices decline, panelists said.