CHICAGO As Chinese extrusion capacity continues to increase, North American extruders must protect U.S. import duties and be watchful of attemptslegal or otherwiseto get around them, extrusion industry players said.
Demand for aluminum extrusions by Chinas construction market alone is expected to total nearly 10 million tonnes this year compared with 892,000 tonnes in North America, according to Michael Southwood, senior consultant at London-based CRU Group. But despite strong domestic consumption, Chinese extrusion production continues to outweigh demand, with surpluses expected in 2014 and for five years beyond, he said.
"Demand is just not going to be robust enough to keep up with that production, which is going to keep increasing. ... So where is all that going to end up?" Southwood asked attendees at the Aluminum Extruders Council (AEC) Management Conference in Chicago.
Southwood, AEC officials and aluminum extrusion executives all voiced concerns about imports from China.
Even though tariffs are in place to protect North American extruders from unfair competition from Chinese shipments, Chinese extruders continue to find ways into North American markets, generally in the form of components, Southwood said. Prefabricated refrigerated trailers imported from China, for example, rely heavily on aluminum extrusions, with each trailer sold in North America displacing about 3,000 pounds of extrusions that could have been made domestically.
The U.S. International Trade Commission ruled in 2011 that dumped and subsidized imports of aluminum extrusions from China were causing injury to the domestic industry (amm.com, April 28, 2011), and duties were implemented soon after. But the scope of those duties has since been challenged (amm.com, Nov. 28).
Former AEC chairman and retired Bonnell Aluminum Inc. president Duncan Crowdis calculated that the 10 million tonnes in Chinese construction demand for extrusions equates to about 1,350 8-inch presses running full out. "There is a little bit of a sign about whats to come," he said.
Extrusion company executives and AEC officials stressed that more needs to be done to protect the scope of the import duties and to combat attempts to circumvent them. But the cost to the AEC to wage that battle has proven expensive and time consuming, they said.
"The amount of volunteer labor ... and the attorneys fees have been unbelievable. Its $1.2 million per year for us to defend what were doing," Thomas J. Schabel, chief executive officer of Alexandria, Minn.-based Alexandria Industries, said during a "fair trade" reception. The AEC continues to ask members to help pay for those costs, he said.
The scope of the U.S. import duties is wide, so the extrusion industry must be vigilant against any exclusions, Schabel said. "If we let one to four of those go through its precedent setting, and all of a sudden we lose 20 to 30 percent of the effectiveness of the tariffs. We cannot turn our back as an industry."
The North American extrusion market was "absolutely under assault" from low-cost imports from China before the duties were put in place, AEC president Rand Baldwin said. U.S. and Canadian extruders have seen their opportunities expand significantly thanks to those duties, he said.
But the aluminum extrusion sector, like other industries, has found that tariff orders are only the beginning of the fight, and extruders must continue to push back against legal challenges, appeals, waiver requests and illicit challenges such as circumvention, Baldwin said.
"Our market was facing an existential life-or-death threat. We acted. Were alive," he said. "But we need to continue (to act)."