Japan aluminium industry fears U.S. trade action may prompt retaliation
26/07/2017 10:56
* U.S. trade action may result in surplus supply elsewhere
* Japan aluminium exports to U.S. make up about 10 pct of
total
* Japan also concerned about China's surplus aluminium
capacity
By Yuka Obayashi
TOKYO, July 26 (Reuters) - Japan's aluminium industry is
worried that any U.S. trade action to block imports of the metal
may result in surplus supply elsewhere and prompt a
chain-reaction of retaliation by other nations, the head of a
trade body said on Wednesday.
U.S. President Donald Trump's administration is determined
to curb imports of aluminium, along with steel. In April, it
initiated a "Section 232" review of the aluminium industry using
a 1962 law that allows the imposition of tariffs or quotas on
imports if national security is threatened. urn:newsml:reuters.com:*:nL5N1KA1K4
Results of the review are still pending, but the move has
been widely criticised by diplomats who say it risks retaliation
and could undermine global trade if national security becomes an
accepted excuse to break international trade rules. urn:newsml:reuters.com:*:nL8N1JR4XK
"Direct impact to Japan may be limited given the small
portion of its exports that go to the U.S. market, but a
possible battle among many other nations to exclude imports
would be the biggest threat to free trade," Mitsuru Okada, the
new chairman of the Japan Aluminium Association told a small
group of reporters.
Japan, which produces about 2 million tonnes of rolled and
extruded aluminium products a year, exported nearly 250,000
tonnes of those products in 2016.
About 10 percent of the exported material went to the United
States, according to the nation's trade data.
Okada is also president of Japan's biggest aluminium
fabricator UACJ Corp 5741.T , which has been aggressively
investing overseas over the past several years, including in
China, Thailand and the United States.
If many countries start shutting their doors to imports, it
would affect his company's strategy as the UACJ plant in
Thailand was built to become an export base to Oceania, the
Middle East and points further west, he said.
Okada also expressed concerns over surplus aluminium
capacity in top producer China.
"We hear China is cutting smelters' capacity, but we don't
know if it will continue," Okada said, pointing to growing ingot
demand from local aluminium fabricators that are rapidly
expanding production capacity.
Aluminium prices CMAL3 have gained more than 10 percent
this year, in part due to the capacity cuts in China. Benchmark
prices stood at around $1,943 per tonne on Wednesday.
"The prices have bounced back on hopes for China's capacity
reduction and growing demand for automobiles," Okada said.
The global trend towards stricter environmental rules for
automobiles will continue, he said, and force automakers to use
lighter materials.
(Reporting by Yuka Obayashi; Editing by Tom Hogue)
((Yuka.Obayashi@thomsonreuters.com; +813-6441-1798; Reuters
Messaging: yuka.obayashi.thomsonreuters.com@reuters.net))
Keywords: JAPAN ALUMINIUM/