European downstream trade group Federation of Aluminium Consumers in Europe (FACE) called upon Europe’s governments to end import tariffs on primary and unwrought aluminium, pointing to a study commissioned by the group that found such import tariffs have cost Europe’s downstream aluminium sector up to €18 billion since the year 2000.
According to FACE, Europe’s imports of raw aluminium has grown for the past several years, with overseas aluminium meeting up to 74 percent of the continent’s demand. Tariffs on imported aluminium range between 3 and 6 percent at present, with the rationale for such import levies resting with the idea that such hurdles protect the continent’s aluminium smelters.
However, per the study, which was carried out by Rome’s LUISS University, the decline in Europe’s smelting capacity has continued even with such measures in place. The study noted that smelter closures and divestments by major aluminium producers has cost the continent 30 percent of its primary aluminium production capacity over the past decade, leaving only 2 million metric tons per annum of aluminium capacity operating in Europe.
Meanwhile, demand for aluminium products continues to rise, with an average increase of 3 percent per year. With a continent-wide demand for aluminium downstream products topping 12 million metric tons per year, Europe’s downstream SMEs have fallen victim to high raw aluminium prices. The continent’s downstream aluminium sector, which provides 92 percent of aluminium jobs and 70 percent of the turnover for the European aluminium market, frequently finds itself undercut by low-cost competition from mostly Chinese competitors.
“There is no duty-free priced unwrought aluminium available to EU users and consumers,” noted FACE’s EU and Multilateral Affairs head Roger Bertozzi. “Through a non-transparent market mechanism, the equivalent of the value of the highest level of the tariffs structure, or 6%, is included in the market premium for all the unwrought aluminium sold in the EU, irrespective of origin.”
FACE continued by noting that, in addition to falling aluminium capacity, the price of locally-sourced or duty-free aluminium is generally augmented with a premium that reflects the value of the 6-percent tariff level factored into the price, leading to what the association calls a “hidden subsidy mechanism.”
“Not only do EU aluminium consumers pay more than they should for their raw material, but they also unwillingly ‘subsidise’ EU and extra-EU producers who benefit from artificially higher prices,” opined Secretary-General of FACE Mario Conserva. “This situation is unfair, destructive and cannot continue unchecked.”