U.S. Makes WTO Complaint Over Chinese Aluminum Subsidies

Researched by Industrial Info Resources (Sugar Land, Texas)--The U.S. Trade Representative's Office on Thursday made a complaint with the World Trade Organization (WTO) against what it perceives as unfair subsidies in China's aluminum sector. Industrial Info is tracking $5.98 billion of U.S. aluminum projects set to kick off between 2015 and 2017 that have been cancelled or placed on hold.

The complaint is similar to those voiced against China's steel sector, which also has been accused of unfair subsidies and, more recently, routing steel through Vietnam in order to thwart trade restrictions. For more information see October 18, 2016, article - U.S. Steel Mill Projects Face Delays as Industry Struggles with Prices, Imports.

The latest complaint against China's aluminum sector is largely seen as a parting blow against overall unfair trade practices by China in the final days of President Barack Obama's administration. "China gives its aluminum industry an unfair advantage through underpriced loans and other illegal government subsidies," said Obama in a statement accompanying the announcement. "These kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminum, steel and other sectors."

Among the largest aluminum projects currently placed on hold in the U.S. is Revolution Aluminum's $2.4 billion grassroot flat-rolled aluminum mill in Pineville, Louisiana. The mill was planned to be built on a former International Paper Company (NYSE:IP) (Memphis, Tennessee) site to supply more than 1.3 million pounds per year of aluminum to the automotive industry. The project is currently on hold due to financing.

Also on hold in is Alcoa Corporation's (NYSE:AA) (New York, New York) $1 billion aluminum operations modernization in Massena, New York. The project was meant to add a new 140,000-ton-per-year pot line to replace three potlines set to be shut down, but remains on hold due to market conditions.

The U.S. steel industry has, however, had some moderate success in its fight against China's dumping of steel into U.S. markets. Complaints against Chinese subsidies of the steel industry led to the country cutting steel production by 45 million tons, according to ABC News. If WTO trade changes can be made soon to China's handling of aluminum, things could appear brighter for the North American aluminum sector, as according to Industrial Info's 2017 Global Market Outlook, the amount of aluminum used in autos is expected to increase 20% by 2020.

Despite the cancelation of larger projects, the aluminum sector in the U.S. remains active, with more than $3 billion in active aluminum projects being tracked by Industrial Info. Among these is Arconic Incorporated's (NYSE:ARNC) (New York) planned $750 million micromill plant expansion at its facility in Elmendorf, Texas, near San Antonio. For additional details, see December 15, 2016, article - Alcoa Spinoff Arconic Plans Capex for 2017. The project is planned to kick off this summer and take about a year and a half to complete.

Also under way is Aleris International Incorporated's (Lewisport, Kentucky) $350 million aluminum rolling mill and coil coating plant expansion in Lewisport. The project consists of constructing a 90,000-square-foot-building to allow for the production of 480 million pounds per year of aluminum auto body sheet. The project began construction in early 2015 and is expected to be completed this summer.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.