UPDATE 2-China's Zhongwang evading aluminum import duties -U.S. group

(Adds details from complaint, background on Zhongwang in paragrahs 3, 12-15)

Oct 23 (Reuters) - U.S. aluminum extruders have accused Zhongwang Group, the world’s second largest producer of aluminum extrusions, of evading U.S. import duties, firing the first salvo in a dispute over China’s ballooning exports.

In a petition filed with the U.S. Commerce Department late on Thursday, the U.S. Aluminum Extruders Council (AEC) alleged China Zhongwang Holdings Ltd is shipping extruded aluminum products, including pallets and 5050 alloy extrusions, into the United States without paying duties.

” has been engaged in a concerted effort to avoid U.S. duties and maximize its ability to continue to flood the global market with unfairly traded Chinese aluminum,” the complaint said.

Extrusion is the process of shaping aluminum, by forcing it to flow through an opening in a die.

The complaint asked the government to clarify that pallets and 5050 alloys are subject to the antidumping and counterveiling duties introduced in 2011. That ruling marked a major victory for U.S. extruders that argued Chinese exports were unfairly subsidized.

The AEC’s complaint said Zhongwang’s shipments of both materials into the United States have increased substantially since the duties were put in place.

The Commerce Department has 45 days to initiate an investigation.

The filing is the first formal move to curb China’s aluminum exports, which U.S. producers say have grown steadily over the past year.

U.S. producers like Alcoa Inc say this has hurt prices and margins, helping push London Metal Exchange prices to six-year lows.

The Aluminum Association, which represents aluminum producers and fabricators, has called on U.S. regulators to probe mislabeling of China’s exports of semifabricated aluminum products to avoid paying duties.

The AEC’s case is separate from any action the Aluminum Association might take, but highlights deepening worries about the impact of China’s surplus inventory on the global market.

The allegations come months after short-seller Dupre Analytics alleged Zhongwang inflated sales by sending shipments to companies it controls offshore, which the company dismissed as “groundless or untrue.”

At the time, the AEC called on several governments to investigate the claims.

Zhongwang’s sales to the United States fell 86 percent, to $62.5 million, in 2011 after the duties were imposed. But revenue bounced back in 2012 and continued rising to $302.9 million in 2014, which the complaint attributed to pallet shipments.

“Zhongwang appears to have created these “pallets” sepcifically for the purpose of circumventing the orders,” the complaint read. (Reporting by Luc Cohen in New York; Editing by Jeffrey Benkoe and Frances Kerry)