China’s passive measures to impose tariffs on US$60 billion in goods will not have a material impact on the aluminum industry and the market; however, the United States has increased tariffs on China’s $200 billion in exports, making trade-affected aluminum and related products The scope is further expanded and the degree is further deepened, and the indirect effects generated at the same time cannot be ignored.
In 2018, China imported a total of 11.35 billion US dollars of aluminum-related commodities such as bauxite, alumina, unwrought aluminum and aluminum alloy, aluminum scrap, aluminum and aluminum products, of which 1.26 billion US dollars were imported from the United States, accounting for 11.1%. The export value of the above-mentioned aluminum-related commodities was US$27.83 billion, of which US$3.22 billion was exported to the US, accounting for 11.6%. The impact of Sino-US tariffs on China's aluminum industry and market needs to be analyzed from both import and export.
On the import side, China imposes tariffs on US goods, mainly affecting aluminum and scrap aluminum. There are 55 tax items related to aluminum in China's $60 billion commodity list, mainly focusing on aluminum and its products in Chapter 76 of HS Code. There are 51 tax items covering 96 chapters and 96% of commodities. Among them, the addition of 25% tariffs involves 25 tax items, involving imports from the United States amounting to 75.089 million US dollars, accounting for 3.0% of China's global import value in 2018; adding 20% tariffs involving 9 tax items, involving imports from the United States 579.99 million US dollars, accounting for 7.7% of China's total imports in 2018; 10% tariffs involving 21 tax items, involving imports from the United States amounted to 311.21 million US dollars, accounting for 24.5% of China's total imports in 2018; Involved in aluminum goods. The total of 55 tax items related to China's imports of goods worth 440 million US dollars from the United States, accounting for 9.9% of the total amount of imports of such goods in China, accounting for 35.2% of the total amount of imported aluminum goods from the United States. From the analysis of commodity types, it mainly involves 32,995 tons of aluminum (HS code 7603-7608), including high value-added aluminum slabs and pipes; aluminum products (HS code 7609-7616) 2,334 tons. After the addition of tariffs, the cost of China's imports of related products from the United States will increase to varying degrees. In a short period of time, a small number of high-end aluminum and aluminum products that rely on imports may have problems such as supply shortage or delay. However, after a period of transition, China can eliminate the impact through domestic production or the search for import substitution countries. Therefore, China's tariffs on the United States will not have a significant impact on China's imports of aluminum and products. In addition, China’s counter-action against the United States in 2018 has imposed a 25% tariff on imported aluminum scrap from the United States. As a result, China’s imports of scrap aluminum from the United States fell by 16.9% in 2018 compared with 2017; Significant changes have also taken place. Since October 2018, the general trade import of scrap aluminum has completely stopped, all of which are imported for processing trade. The resulting supply gap of scrap aluminum was filled by domestic recycling of scrap aluminum and primary aluminum, and the impact has been digested.
On the export side, the United States increased the import tariff on 200 billion US dollars of goods from 10% to 25%. The impact on the aluminum industry is mainly concentrated on the export of aluminum products and aluminum-containing end products. The US 200 billion US dollar list includes 23 aluminum, aluminum products and related products. In 2018, China exported 1.32 billion US dollars of such goods to the United States, accounting for 18.0% of China's total exports of such goods. Commodities include: (1) three types of raw materials such as aluminum hydroxide, aluminum fluoride, and aluminum scrap; (2) only aluminum powder, and aluminum has been used in the United States for aluminum extrusion, sheet and strip, aluminum foil, etc. The three major categories of aluminum have implemented double-anti-sanctions; (3) most of the aluminum products in Chapter 76 of the HS Code (HS 7609-7616). Among them, except for the large export volume of aluminum products to the United States, the export volume of other commodities is very small. In 2018, China exported 387,000 tons of aluminum products to the United States, of which the aluminum products involved in the case were 225,000 tons, accounting for 14.2% of the total exports of such goods in China.
In addition, in addition to aluminum and aluminum products (ie, HS Code 76), the 200 billion list also contains a large number of parts and equipment products. Due to the wide application of aluminum, the export of these products is hindered, and the indirect impact on China's aluminum consumption cannot be ignored. Among them, aluminum alloy wheels (HS code 87087091) are the most concentrated aluminum, and also a large export to the United States. In 2018, China exported 480,000 tons of aluminum alloy automobile wheels to the United States, accounting for 47.8% of China's exports of such goods. It is understood that the proportion of aluminum alloy wheels exported from China to the US is 50% for the OEM and maintenance markets. Due to the limited production capacity of aluminum alloy wheels outside China, it is difficult for the United States to find import substitutions in a short period of time. The OEM part also needs to be imported from China, but the export to the maintenance market will be reduced to some extent. In the long run, it will urge the aluminum wheel industry to seek overseas industrial layout, thereby reducing the demand for domestic aluminum raw materials.
Aluminum is a commodity that has been the focus of attention in the US-China trade friction and is also an area subject to intensive sanctions. So far, the United States has implemented double-reaction on China's extruded materials, sheet and strip, and aluminum foil. It has imposed a "232 tariff" on some products, plus 50 billion last year and 200 billion US dollars this time. Import tariffs on goods have increased from 10% to 25%, and China's aluminum, aluminum and some aluminum-containing parts have been “rejected”. As a counter-measure, China imposed tariffs on imported goods from the United States. Apart from the previous impact on the import of scrap aluminum, this time has no substantial impact on the import of aluminum and aluminum products. Considering imports and exports comprehensively, the impact of Sino-US trade friction on China's aluminum industry is mainly reflected in the deterioration of the export market. After the three major categories of aluminum are blocked due to double exports, the export scale of aluminum products is estimated to be reduced by 200,000. Tons per year. In addition, the indirect impact of aluminum and aluminum consumption on the export of parts and equipment is not negligible. For example, the export of aluminum alloy wheels is estimated to be reduced by at least 50%, or 250,000 tons/year.
