Aluminum: Competitive Conditions Affecting the U.S. …

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, karl.tsuji@ Mihir Torsekar, mihir.torsekar@

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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