U.S. International Trade Commission launches aluminum trade probe

(Reuters) - The U.S. International Trade Commission said on Wednesday it had launched an investigation into the U.S. aluminum industry and the global trade in the metal, a move that analysts said was aimed at staunching a steady flow of exports from China.

A worker drives a forklift to transport aluminum bars at a factory in Anshun, Guizhou province, China, July 1, 2013. REUTERS/Stringer

The investigation is the first formal move by U.S. regulators to probe the impact on domestic smelters of lower-cost imports following a prolonged campaign by Century Aluminum Co, which is majority-owned by Glencore PLC.

The commission said it would “report on factors of competition in major unwrought and wrought (semi-fabricated) aluminum producing and exporting countries, including the United States”.

The report did not specifically refer to China, the world’s biggest producer and consumer of aluminum, which has been churning out much more of the metal than it can use, buttressed by local government subsidies to an industry that is a major employer.

U.S. producers, along with United Company Rusal have accused Chinese producers of circumventing a 15-percent export tax on primary aluminum by shipping so-called “fake” semi-fabricated products that are intended to be re-melted later, piling pressure on overseas rivals.

The announcement comes just days after Alcoa Inc stopped production at one of the last remaining U.S. smelters. Its 269,000 tonne Warrick Operations smelter in Evansville, Indiana, closed at the end of March.

“The principal driver of exports is China’s oversupply. That’s not likely to change in the near term because production is still well over demand,” said Paul Adkins, managing director of Beijing-based consultancy AZ China.

AZ China expects China’s output to grow by 2 million tonnes this year. China produced 31.4 million tonnes last year, according to government statistics, and exported a record 4.2 million tonnes of semi-finished products.

The commission said that it expected to deliver a report by June 24, 2017.

“The USITC will examine industry characteristics, recent trade trends and developments, competitive strengths and weakness, factors driving unwrought-production capacity increases, and government policies that affect aluminum production and exports in these countries.”

A slowdown in the world’s No.2 economy has sapped local appetite for metals, pushing producers to turn to overseas markets. The country has been accused of selling steel cheaply abroad, hurting producers in places such as Europe and India.

Reporting by Washington Newsroom and Melanie Burton in MELBOURNE; Additional reporting by Josephine Mason and Luc Cohen in NEW YORK; Editing by Eric Walsh and Joseph Radford