Aluminum: Competitive Conditions Affecting the US Industry

610 Pages·2017·6.44 MB·English

United States
International Trade Commission
Aluminum: Competitive
Conditions Affecting the
U.S. Industry

June 2017
Publication Number: 4703
Investigation Number: 332-557
United States International Trade Commission
Commissioners
Rhonda K. Schmidtlein, Chairman
David S. Johanson, Vice Chairman
Irving A. Williamson
Meredith M. Broadbent

Catherine DeFilippo
Director, Office of Operations
Jonathan Coleman
Director, Office of Industries
Address all communications to
Secretary to the Commission
United States International Trade Commission
Washington, DC 20436
United States International Trade Commission

Aluminum: Competitive
Conditions Affecting the
U.S. Industry
June 2017
Publication Number: 4703
Investigation Number: 332-557
United States International Trade Commission
This report was prepared principally by

Co-Project Leaders
Karl Tsuji, [email protected]
Mihir Torsekar, [email protected]

Office of Industries
Renee Berry, Mark Brininstool, Logan Cobb, Brian Daigle, Andrew David, Diana Friedman,
David Guberman, Vincent Honnold, Mahnaz Khan, Gregory LaRocca, Kathryn Lundquist,
Daniel Matthews, Deborah McNay, Jessica Pugliese, Mitchell Semanik, and Marin Weaver

Office of Economics
Andre Barbe, Alan Fox, and Ravinder Ubee

Office of Analysis and Research
Robert Bauchspies, Maureen Letostak, David Lundy, Laura Thayn, and Wendy Willis

Office of Tariff Affairs and Trade Agreements
Janet Freas

Office of the General Counsel
William Gearhart

Content Reviewers
John Fry and Wen Jin Yuan

Statistical Reviewer
Jeremy Wise

Editorial Reviewer
Judy Edelhoff and Peg Hausman

Administrative Support
Jaime Bruckman, Cynthia Payne, Monica Sanders, and Blair Williams

Special Assistance
Robert Feinberg

Interns
Jared Angle, Renato Barredo, Robert Casanova, Sharifa Crawford, Pamela Davis,
Celia Feldpausch, Maeryn Goldman, Fernando Gracia, Matthew Hoff, Christopher Mitchell,
KaDeadra McNealy, Thomas Ponikowski, Mary Roop, and Amanda Ryan

Office of the Chief Information Officer
Phyllis Boone and Shala Ewing

Help Desk and Customer Service Division

Under the direction of
Robert Carr, Chief
Natural Resources and Energy Division
Office of Industries
Table of Contents
Abbreviations and Acronyms ............................................................................ 21
Glossary ............................................................................................................ 25
Executive Summary .......................................................................................... 29
Chapter 1 Introduction ...................................................................................... 43
Overview ................................................................................................................................... 43
Scope ......................................................................................................................................... 44
Approach ................................................................................................................................... 46
Information Sources ................................................................................................................. 47
Organization of the Report ....................................................................................................... 49
Overview of Aluminum Production Processes and Products ................................................... 49
Primary Unwrought Aluminum ............................................................................................. 51
Secondary Unwrought Aluminum ......................................................................................... 52
Alloyed and Unalloyed Aluminum ........................................................................................ 53
Wrought Aluminum .............................................................................................................. 54
Overview of Aluminum End Uses ............................................................................................. 56
Construction .......................................................................................................................... 57
Electrical ................................................................................................................................ 57
Transport ............................................................................................................................... 58
Packaging and Foil Stock ....................................................................................................... 59
Machinery and Equipment, Consumer Durables, and Other Products ................................ 59
Bibliography .............................................................................................................................. 60
Chapter 2 Global Overview ............................................................................... 65
Overview of Global Production ................................................................................................. 67
Primary Unwrought Aluminum ............................................................................................. 67
Secondary Unwrought Aluminum ......................................................................................... 72
Wrought Aluminum .............................................................................................................. 73
Overview of Global Consumption ............................................................................................. 78
Primary Unwrought Aluminum ............................................................................................. 78
Wrought Aluminum .............................................................................................................. 79
Overview of Global Trade ......................................................................................................... 81
Unwrought Aluminum .......................................................................................................... 82
Wrought Aluminum .............................................................................................................. 85
Trade Flows through Third Countries ................................................................................... 88
Overview of Global Prices, Stocks, and Cost of Production ..................................................... 91
Prices ..................................................................................................................................... 91
Stocks .................................................................................................................................... 93
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Costs of Production ............................................................................................................... 96
Bibliography .............................................................................................................................. 97
Chapter 3 Cross-Country Comparison of Industry Competitiveness in Major
Aluminum Producing Countries ...................................................................... 103
Overview of Key Competitive Factors..................................................................................... 103
Primary Unwrought Aluminum ........................................................................................... 104
Secondary Unwrought and Wrought Aluminum ................................................................ 105
Cross-Country Comparison of Competitive Factors ............................................................... 108
Primary Unwrought Aluminum ........................................................................................... 109
Secondary Unwrought and Wrought Aluminum ................................................................ 118
Bibliography ............................................................................................................................ 123
Chapter 4 United States .................................................................................. 129
Overview ................................................................................................................................. 129
Industry Structure ................................................................................................................... 131
Primary Unwrought Aluminum ........................................................................................... 131
Secondary Unwrought Aluminum ....................................................................................... 137
Wrought Aluminum ............................................................................................................ 142
Production............................................................................................................................... 148
Primary Unwrought Aluminum ........................................................................................... 148
Secondary Unwrought Aluminum ....................................................................................... 150
Wrought Aluminum ............................................................................................................ 151
Consumption ........................................................................................................................... 153
Unwrought Aluminum ........................................................................................................ 153
Wrought Aluminum ............................................................................................................ 154
Trade ....................................................................................................................................... 156
Unwrought Aluminum ........................................................................................................ 157
Wrought Aluminum ............................................................................................................ 158
Government Policies and Programs ....................................................................................... 161
Grants .................................................................................................................................. 162
Electricity Contracts ............................................................................................................ 162
Competitive Factors ................................................................................................................ 163
Primary Unwrought Aluminum ........................................................................................... 164
Secondary Unwrought Aluminum ....................................................................................... 166
Wrought Aluminum ............................................................................................................ 167
Bibliography ............................................................................................................................ 173
Chapter 5 Canada............................................................................................ 185
Overview ................................................................................................................................. 185
Industry Structure ................................................................................................................... 186
Primary Unwrought Aluminum ........................................................................................... 186
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Aluminum: Competitive Conditions Affecting the U.S. Industry
Secondary Unwrought Aluminum ....................................................................................... 191
Wrought Aluminum ............................................................................................................ 193
Production............................................................................................................................... 193
Primary Unwrought Aluminum ........................................................................................... 194
Secondary Unwrought Aluminum ....................................................................................... 194
Wrought Aluminum ............................................................................................................ 195
Consumption ........................................................................................................................... 196
Unwrought Aluminum ........................................................................................................ 196
Wrought Aluminum ............................................................................................................ 196
Trade ....................................................................................................................................... 197
Unwrought Aluminum ........................................................................................................ 198
Wrought Aluminum ............................................................................................................ 200
Import Injury Actions .......................................................................................................... 202
Government Policies and Programs ....................................................................................... 202
Quebec Provincial Policies .................................................................................................. 203
Tax and Tariff Policies ......................................................................................................... 203
Competitive Factors ................................................................................................................ 204
Cost Overview ..................................................................................................................... 205
Low Electric Power Costs Are the Key Competitive Advantage of Canadian Smelters ...... 206
Continuous Upgrading of Potline Technology Enhances Canadian Smelting Efficiency .... 208
Canadian Smelters Benefit from Proximity to Large U.S. Market ...................................... 208
Bibliography ............................................................................................................................ 210
Chapter 6 China .............................................................................................. 219
Overview ................................................................................................................................. 219
Industry Structure ................................................................................................................... 221
Primary Unwrought Aluminum ........................................................................................... 222
Secondary Unwrought Aluminum ....................................................................................... 228
Wrought Aluminum ............................................................................................................ 232
Production............................................................................................................................... 236
Primary Unwrought Aluminum ........................................................................................... 236
Secondary Unwrought Aluminum ....................................................................................... 239
Wrought Aluminum ............................................................................................................ 240
Consumption ........................................................................................................................... 242
Primary and Secondary Unwrought Aluminum .................................................................. 242
Wrought Aluminum ............................................................................................................ 243
Trade ....................................................................................................................................... 244
Unwrought Aluminum ........................................................................................................ 245
Wrought Aluminum ............................................................................................................ 249
Government Policies and Programs ....................................................................................... 253
Trade Policies ...................................................................................................................... 254
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Energy Policies .................................................................................................................... 256
Environmental Policies ........................................................................................................ 257
Financing ............................................................................................................................. 259
Tax Benefits ......................................................................................................................... 261
Grants .................................................................................................................................. 261
Low-priced Inputs Provided by State-Owned Enterprise ................................................... 262
Recent Efforts to Curb Overcapacity................................................................................... 263
Other ................................................................................................................................... 264
Issues Raised in Ongoing WTO and U.S. Antidumping and Countervailing Duty
Investigations ...................................................................................................................... 265
Competitive Factors ................................................................................................................ 267
Primary Unwrought Aluminum ........................................................................................... 268
Secondary Unwrought Aluminum ....................................................................................... 274
Wrought Aluminum ............................................................................................................ 276
Bibliography ............................................................................................................................ 281
Chapter 7 Gulf Cooperation Council Countries ................................................ 303
Overview ................................................................................................................................. 303
Industry Structure ................................................................................................................... 304
Primary Unwrought Aluminum ........................................................................................... 304
Wrought Aluminum ............................................................................................................ 309
Production............................................................................................................................... 312
Primary Unwrought Aluminum ........................................................................................... 312
Wrought Aluminum ............................................................................................................ 313
Consumption ........................................................................................................................... 315
Unwrought Aluminum ........................................................................................................ 315
Wrought Aluminum ............................................................................................................ 316
Trade ....................................................................................................................................... 317
Unwrought Aluminum ........................................................................................................ 317
Wrought Aluminum ............................................................................................................ 320
Government Policies and Programs ....................................................................................... 323
Competitive Factors ................................................................................................................ 326
Cost Overview ..................................................................................................................... 327
Low Electricity Costs Are a Key Competitive Advantage for Primary Production .............. 328
Upstream Investments Assure Raw Material Supply for Smelters ..................................... 331
Efficiencies from Investment in New and Technologically Advanced Smelters ................. 332
Bibliography ............................................................................................................................ 334
Chapter 8 Russia ............................................................................................. 341
Overview ................................................................................................................................. 341
Industry Structure ................................................................................................................... 342
Primary Unwrought Aluminum ........................................................................................... 342
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Aluminum: Competitive Conditions Affecting the U.S. Industry
Secondary Unwrought Aluminum ....................................................................................... 345
Wrought Aluminum ............................................................................................................ 346
Production............................................................................................................................... 347
Primary Unwrought Aluminum ........................................................................................... 347
Secondary Unwrought Aluminum ....................................................................................... 348
Wrought Aluminum ............................................................................................................ 349
Consumption ........................................................................................................................... 350
Unwrought Aluminum ........................................................................................................ 350
Wrought Aluminum ............................................................................................................ 351
Trade ....................................................................................................................................... 354
Unwrought .......................................................................................................................... 354
Wrought .............................................................................................................................. 355
Government Policies and Programs ....................................................................................... 357
State Aluminum Reserve ..................................................................................................... 357
Investment Fund of the Russian Federation ....................................................................... 357
Scrap Export Duty................................................................................................................ 357
Unwrought Aluminum Export Duties .................................................................................. 358
Special Economic Zones ...................................................................................................... 359
Government Strategy to Develop Ferrous and Nonferrous Metallurgy ............................. 359
Competitive Factors ................................................................................................................ 360
Cost Overview ..................................................................................................................... 361
Low Electric Power Costs Are a Key Competitive Advantage ............................................. 362
Upstream Investments Assure Raw Material Supplies ....................................................... 363
Research and Development Leads to Technological Innovation ........................................ 363
Distance from Suppliers and Markets Raises Transportation Costs ................................... 365
Bibliography ............................................................................................................................ 366
Chapter 9 Europe ............................................................................................ 371
Overview ................................................................................................................................. 371
Industry Structure ................................................................................................................... 373
Norway: Primary Unwrought Aluminum ............................................................................ 375
Germany: Secondary Unwrought and Wrought Aluminum ............................................... 377
Production............................................................................................................................... 380
Primary Unwrought Aluminum ........................................................................................... 380
Secondary Unwrought Aluminum ....................................................................................... 381
Wrought Aluminum ............................................................................................................ 381
Consumption ........................................................................................................................... 383
Unwrought Aluminum ........................................................................................................ 383
Wrought Aluminum ............................................................................................................ 384
Trade ....................................................................................................................................... 384
Government Policies and Programs ....................................................................................... 391
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Competitive Factors ................................................................................................................ 393
Norway: Primary Unwrought Aluminum ............................................................................ 393
Germany: Secondary Unwrought and Wrought Aluminum ............................................... 398
Bibliography ............................................................................................................................ 404
Chapter 10 Quantitative Assessment of the Impact of Certain Foreign
Government Policies ....................................................................................... 421
Summary ................................................................................................................................. 421
Methodological Approach ...................................................................................................... 422
Policies ................................................................................................................................ 423
Simulations of Policy Changes ............................................................................................ 427
Results ..................................................................................................................................... 427
Chinese Trade Policies ........................................................................................................ 428
Chinese Domestic Policies ................................................................................................... 429
Gulf Cooperation Council Energy Policies ........................................................................... 430
Comparison of Model and Survey ...................................................................................... 431
Bibliography ............................................................................................................................ 433
Appendix A Request Letter ............................................................................. 435
Appendix B Federal Register Notices ............................................................... 439
Appendix C Calendar of Hearing Witnesses ..................................................... 447
Appendix D Summary of the Views of Interested Parties ................................ 455
Appendix E Harmonized System Classifications for Unwrought and Wrought
Aluminum Products ........................................................................................ 475
Appendix F Survey Questionnaire ................................................................... 479
Appendix G Description of the Commission’s Survey Methodology ................ 505
Appendix H Survey Results ............................................................................. 511
Appendix I Aluminum Technical Background .................................................. 525
Appendix J Aluminum Trade Flows through Third Countries .......................... 539
Appendix K Technical Appendix to the Quantitative Assessment of the
Impact of Certain Foreign Government Policies .............................................. 555
Appendix L Data Tables for Figures ................................................................. 587

Boxes
Box 1.1: Recent U.S. Trade Actions Relating to Imports of Aluminum, 2011–17 ........................ 44
Box 2.1: Trade Policies Affecting Chinese Exports of Remelt Semis ............................................ 89
Box 2.2: Commodity Exchanges ................................................................................................... 92
Box 2.3: Commodity Exchange Warehouses ................................................................................ 95
Box 4.1: United States: Overview of the U.S. Primary Aluminum Producers Still Operating .... 136
Box 4.2: United States: Two Types of Secondary Producers: Captive and Merchant ................ 138
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