Alcoa CEO calls for Canada¡¯s tariff exemption and focus on Chinese overcapacity during Q1 earnings call

During Alcoa’s first quarter earnings call on April 17, Alcoa CEO Roy C. Harvey highlighted aluminium trade imbalance, Chinese overcapacity, Section 232 tariffs and the proposed quota on Canada’s aluminium export to the U.S.

He said that in China downward domestic demand growth is constantly being balanced by higher levels of smelting curtailment. While the government is offering export incentives, Chinese exports are bound to grow more this year and will continue to flood international markets despite trade barriers. He added that the U.S. trade policy designed to help the domestic aluminium industry has not been able to address Chinese overcapacity, and the growing export of semi-fabricated products from that country.

“Since U.S. Section 232 tariffs were enacted last year, Chinese exports have continued to grow, and as we said last quarter, this large outflow of metal competes with rest of world semi-finished production, lowers primary aluminum demand outside of China…,” he said.

He said that as the U.S. is an import dependent aluminium consumer, the downstream consumers are now paying more for their aluminium than are their competitors overseas. For example, he said that the US is importing more aluminium cans from Mexico, and Mexico is importing more can sheet from China. And finally, it is China that is getting benefitted.  He emphasised that tariffs are not having the desired impact, and they are rather hurting the downstream industry.

According to him, the proposed quota on import from its close partners would further impact the downstream sector. It might lead to a situation where there would be a rush of metal coming in and then running up against the hard quota. It might lead to a situation where U.S. consumers cannot source the material that they need because other products have been brought in to adhere to the strict quota limit.

“…we've become increasingly concerned that quotas on Canadian imports to the U.S. may replace tariffs. Canada is key to the North American supply chain and is an important source of metal for U.S. aluminum consumers…And quotas are also likely to disrupt the North American market and hurt aluminum consumers already paying more for their aluminum inputs than their global competitors,” he added.

He said that the industry is in regular communication with government representatives on this issue and will continue to advocate for a solution that addresses China's overcapacity effectively.

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