Suppliers are looking for intermediaries to re-export the «volatile» metal to the United States
The United States risks losing Russian aluminum. On April 10, protective duties on the export of goods from our “volatile metal” to the American market came into force, which, most likely, will completely stop the previous deliveries in this direction. Domestic manufacturers can find alternative distribution channels in other regions of the world, however, buyers from China and the Middle East will certainly require significant discounts for increasing purchases of expensive products.
The 200% duties imposed by the Americans concern not only direct imports of aluminum goods from Russia, but also supplies from other countries of products that contain at least some amount of metal of Russian origin. The exception will be states that themselves will introduce similar protective tariffs.
Washington has been preparing for the introduction of aluminum duties for several years, says Artem Deev, head of the analytical department at AMarkets. Back in 2018, the then US President Donald Trump was given a report that allegedly threatened the US state security by importing aluminum products from Russia. They could have been introduced immediately, but the American industry could have suffered: the suspension of imports put two of the five US aluminum smelters on the verge of closing. Now the Americans are not experiencing a particular shortage in non-ferrous metal, having arranged the purchase of more than half of the required volumes from Canada and China.
According to Bloomberg, the coverage of increased fiscal rates by all suppliers of products that use Russian raw materials in the manufacture will completely deprive American consumers of aluminum from the Russian Federation, and domestic producers from the US sales market. However, overseas trading platforms, although they brought our sectoral exporters at least $500 million in revenue, were never considered the main sales area for this product. The share of Russian «volatile» metal was only 10% of US imports. In turn, up to 40% of our exports continue to be mastered by EU consumers, almost a third goes to the CIS, and Asian customers buy 23% of foreign aluminum supplies from Russia. “These regions remain a stable market for the sale of domestic products, the participants of which do not need various increased tariffs at all,” Deev is sure. “As far as America is concerned, both sides will lose out as a result of the destruction of established business ties.”
Europe is really in no hurry to join Washington's defensive measures. From a political point of view, the EU leadership may not mind repeating the US move, but the countries of the Old World do not yet have an economically justified opportunity for this. Back in 2022, their aluminum producers experienced a serious shock from rising energy prices, which occupy a significant share in the cost of finished products, so they began to reduce or even close their own production. “Despite the fact that at present the cost of electricity generation is lower than last year, not a single aluminum producer intends to increase production in the region, where profits can be collapsed by European Commission officials for political reasons,” believes the director of the corporate finance department of IVA Investment Company Partners» Artem Tuzov. “For the real sector of the continent, the rejection of aluminum, especially aluminum products from Russia, will be extremely painful.”
China and the countries of the Middle East may become the most likely route for reorienting the supply of Russian «volatile» metal, which was previously sent to the United States. Theoretically, there should be plenty of buyers in these regions. As far back as last year, there was an abundance of aluminum in the automotive, shipbuilding and other world production markets: the surplus was at least 1.4 million tons. This year, on the contrary, a deficit of 1.5 million tons is expected.
Meanwhile, despite the protective duties, Russian raw materials still do not leave a chance to end up in American factories. With a large-scale restriction of imports from our country and the establishment of new channels for the supply of non-ferrous metal, the White House needs to insure itself against rising prices and prevent a decrease in the competitiveness of national goods. In such a situation, Chinese or Middle Eastern companies can act as intermediaries, as happens in the fuel sector. “The United States can for the time being turn a blind eye to a strange increase in imports from other countries with a stable volume of production,” says TeleTrade analyst Alexei Fedorov. — Individual countries will not miss the opportunity to take advantage of the situation and capitalize on the friction between Moscow and Washington. True, at first the Russian aluminum industry will have to try to find intermediaries for deliveries to the United States, and this will certainly be accompanied by a high discount.”