The domestic aluminum industry is growing and has the potential to be an even bigger bright spot for U.S. manufacturing. But subsidized production in China, which is leading to unfair and illegal trade practices, threatens the industry’s continued health.
Demand for lightweight, strong, recyclable aluminum continues to rise -- up more than 36 percent since 2009. And over the past 3 years, jobs supported by the U.S. industry are up 3 percent while aluminum’s impact on the economy is up 15 percent – this during a time when many commodities industries are struggling.
Because customers are turning to engineered aluminum solutions to make good products great and great products even better – from more fuel efficient vehicles to sustainable packaging to green buildings. And more growth is on the horizon – with more than $2.6 billion in U.S.-based plant expansions committed or invested by the industry since 2013. In fact, the United States is the world’s single biggest market for aluminum outside of China.
And yet much of this future growth potential is threatened for one key reason – the persistent and dramatic overproduction of aluminum in China which is distorting the market and hurting global producers.
Over the past decade, Chinese aluminum production has grown at an alarming rate. . In 2000, China produced about 11 percent of the world’s primary aluminum – today, it produces more than half.
Much of this expansion is being driven by artificial incentives, subsidies and central planning by the Chinese government. This behavior led to smelters being built even when doing so made little economic or environmental sense.
If Chinese smelters were a standalone country, they would be the 16th highest contributor to global carbon emissions in the world. This during a time when carbon emissions from North American primary aluminum production have declined nearly 40 percent.
This oversupply, paired with Chinese export tax policy, is creating perverse incentives for producers to engage in a number of questionable and possibly illegal trade activities.
All of this is driving a dramatic increase of imported Chinese aluminum into the United States.
The current situation is bad for China and bad for the rest of the world.
While Chinese primary aluminum production has continued to grow, U.S. producers are going out of business. Seven U.S. based smelters have either closed or curtailed since 2015 meaning only 2 smelters remain fully operational in the United States today – the lowest level of production since World War II. And while overall employment in the U.S. aluminum business is up, employment in the upstream segment has dropped dramatically – from more than 12,000 primary production and alumina refining jobs in 2013 to around 5,000 today – a near 60 percent drop in 3 short years.
So what can we do to fix the problem? The Aluminum Association and its members are calling for a negotiated agreement between the U.S. and Chinese governments to address the overcapacity issue and the unfair trade practices that have resulted. Check out Aluminum Association President & CEO Heidi Brock’s testimony on this topic below or read her remarks here. For the Aluminum Association’s full action plan for the U.S. government click here.
Specific calls to actions include:
The aluminum industry will push these initiatives through a variety of channels including this year’s U.S.-China Strategic and Economic Dialogue, the U.S.-China Joint Commission on Commerce and Trade and by participating fully in the U.S. International Trade Commission’s ongoing investigation into global aluminum production, due for release in June of 2017.
Domestic aluminum producers are among the best in the world and can compete in a marketplace that is free and fair. There is strong global demand for the metal and all aluminum producers and consumers should be able to benefit from this growth. We remain committed as an Association and industry to working toward a sustainable global aluminum market. Working together, China and the United States can achieve this mutually beneficial objective.