Report Highlights How Biden Can Help Aluminum

Since late 2022, the US and EU have been working to establish a GASSA to reduce CO2 emissions and address overcapacities in steel and aluminum. Their current goal is to reach an agreement by October.

The new report, “Political Tailwinds: Examining Trade Policy for the US Aluminum Industry,” was released by SAFE, a policy advocate organization, and the Center for Strategic Industrial Materials, an aluminum and industrial materials policy initiative, together with the Energy Security Leadership Council, which is a group of business and former military leaders committed to reducing US oil dependence.

With primary aluminum production shrinking in the US and imports almost seven times higher than domestically produced product in 2022, “the US aluminum industry is at a tipping point,” the report says.

It recommends the administration: (1) confront China’s overcapacity “head on;” (2) not use GASSA as a trojan horse for protectionist interests; (3) create market transparency by further building the Global Aluminum Trade Monitor to incorporate emissions and social standards; and (4) make the GASSA more inclusive with a focus on a technological race to the top with more partners.

Most importantly, however, (5) “GASSA will only help domestic industry if there is a domestic industry to be helped,” the report says. While the GASSA focuses on two secondary problems facing US smelters – high emissions and China’s overcapacity – it needs to address the main issue of the high cost of energy.

“The consistent challenge to US primary production throughout the last three administrations has been energy and no administration has narrowed in on that issue. The Obama and Trump administration’s efforts prove trade barriers and trade complaints can only go so far in supporting smelters to increase their capacity. By creating a market where clean aluminum is prioritized, GASSA can increase demand for US aluminum with its medium emissions profile. However, US aluminum will need to get cleaner as the market grows, and that requires further intervention at home,” the report concludes.

While aluminum production in North America has been dwindling, it’s exploded in China in over the past 25 years and has been increasing in the rest of the world as well.

After the Section 232 tariffs were put in place in 2018, some primary production was brought back in the US, but not in significant amounts.

“With the loftiest aluminum trade plan to date, President Biden’s GASSA will depend on how he leverages the experiences of his predecessors to avoid pitfalls,” the report notes.

By Laura Miller, laura@steelmarketupdate.com