Sunday, November 27, 2022

UK aluminium sector at threat of wipeout by post-Brexit anti-dumping duties

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British manufacturers have warned that proposed UK anti-dumping duties on Chinese aluminium extrusions are too low and threaten to cause a flood of imports, factory closures and job losses.

In its first new post-Brexit investigation, the Trade Remedies Authority, an independent government advisory body, has recommended setting duties on aluminium extrusions from a group of three large Chinese exporters that collectively account for 70 per cent of the country’s exports to the UK at 10.1 per cent.

Aluminium extruding is a process through which alloyed material is heated and moulded into shapes that have uses in the automotive, infrastructure and construction sectors. The EU has set tariffs on the products at 22.1 per cent, while the US has put them at 33.3 per cent.

Hydro Aluminium UK, the UK’s largest producer of aluminium extrusions, accounting for a quarter of the market, has warned that if the TRA’s recommendation is adopted it would be forced to close its factories, which employ close to 1,000 people and supply London’s electric black cabs and Jaguar Land Rover.

“It’s not just a few percentage points difference, it’s half of the EU level. The duties will be so low it will simply be absorbed by the Chinese exporters,” warned Roger Ablett, managing director of extrusions at Hydro Aluminium UK.

Chinese aluminium producers receive substantial government support, with a 2019 OECD report showing that 85 per cent of subsidies in the global aluminium industry went to five Chinese companies.

Ablett warned that the lower UK tariffs on top of a steep rise in energy bills would result in factory closures, continuing a trend of consolidation and production shutdowns in the country.

“If these final intended measures are at the level they are at the moment then it’s obvious what will happen — that history of closure will continue,” he said. “It could be a complete wipeout.”

He added that closures could also leave the UK re-exporting the Chinese extrusions to EU countries, putting Britain at risk of a trade dispute with Brussels.

Small UK-based producers that supply another 25 per cent of the country’s approximate 190,000 tonne of demand for aluminium extrusions say they could also be at risk under the proposed duty.

Roger Hartshorn, managing director of Garner Aluminium Extrusions, which employs 155 people, said his firm would struggle to compete with Chinese producers unless the anti-dumping tariffs were raised to match other nations.

“In reality if they take away the boundaries or open up the floodgates, we will be left exposed and the UK will lose its internal supply chain for aluminium products,” he warned.

The TRA has had a faltering start since it was established in 2021. It was forced to change its position on anti-dumping duties on steel from China in September after provoking outcry from the domestic industry after initially suggesting measures on imports should be lifted.

The authority began its investigation into the Chinese companies last year and concluded in May that it had “found clear evidence of dumping and injury” for UK producers. Its recommended tariffs for aluminium extrusions range from 7.3 per cent to 29.1 per cent depending on the producer.

A TRA spokesperson said its recommendations were based on evidence related to “the UK market only”, which differs from the EU and US in several aspects. They added that provisional measures had been put in place in the meantime to prevent further damage to British producers.

A final recommendation will be submitted to the secretary of state for international trade in the coming weeks.



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