“After this submission, by law the president has 90 days to decide on any potential action based on the findings of the investigation,” Commerce said on Monday January 22
, confirming reports heard on Friday January 19 that the findings had been delivered.
According to one Washington-based source who spoke with American Metal Market, the report was likely submitted to the White House on Friday night.
Similar to the steel 232 investigation results
, which were delivered to the White House earlier this month, Commerce said it will publish its summary of the aluminium report after Trump issues his decision in the case. If the president takes the full 90 days to determine what trade action to take, if any, the outcomes of both probes would not be made public until mid-April at the earliest.
The news of the report’s completion has spurred mixed reactions in the market - with aluminium industry groups urging Trump to pursue comprehensive action, but market participants concerned about the lack of clarity regarding what the president will do.
“We expect that the report will recognize the significant role the aluminum industry plays in ensuring our nation’s security and welcome the opportunity to engage the administration on an appropriate remedy that will benefit the entire aluminum value chain,” Aluminum Association president and chief executive officer Heidi Brock said in a statement on Sunday January 21. “The association supports actions that specifically address Chinese overcapacity, and protect trading relationships between the US and critical partner countries which are crucial to a thriving domestic aluminum industry.”
The Aluminum Association stressed that any remedies undertaken by Trump “should not interfere with the current trading relationship between the United States and critical trading partner countries.”
That sentiment was echoed by other industry representatives like Norberto Vidaña, president of the Mexican Aluminum Institute, who called for Trump to focus on China while sparing North American Free Trade Agreement participants.
“The US and Canada, we are family,” Vidaña said of those countries’ relationship with Mexico. He further argued that Nafta is “very beneficial for the whole region,” speaking during a question-and-answer session at AMM’s Mexican Steel Forum, held from Tuesday to Thursday, January 16-18, in Cancun, Mexico.
Fair playing field
However, not all industry groups will be satisfied if Trump’s response to the report is limited to China.
“American producers need comprehensive relief against excess capacity from all state-supported enterprises - not just China - to create a fair playing field on which we can compete and prosper,” a spokesman for Chicago-based aluminium producer Century Aluminum Co said January 21. “We encourage the president to pursue a solution that extends beyond China to address the global capacity challenge.”
While industry groups applauded Commerce for concluding its investigation, which began last April
, individuals who spoke to AMM were less convinced as to what the report means for the industry - if anything.
“I think it is revealing that both the steel and aluminium reports have not been made public,” John Mothersole, director of research, pricing and purchasing service at United Kingdom-based IHS Markit, told AMM. “I interpret this to mean that the debate within the administration about what kind of actions to take is still going on.”
While the White House’s stance remains unknown, the market has responded somewhat bullishly to news of the report. US Midwest premium futures on the Chicago Mercantile Exchange (CME) look set to rise from 10.4 cents per lb in January to 12.4 cents per lb in February, reaching 13 cents per lb by July.
Physical spot premiums are poised to move higher this week, up from AMM’s previous assessment of 10.25-10.75 cents per lb
, sources said. Still, some market participants expect the premium to hit a ceiling in the near term.
One supplier told AMM that the spot market cannot support premiums much higher than the CME’s current levels, even if suppliers from key importing areas like Russia and the Middle East are targeted in Trump’s ruling.
“I can’t see the 232 affecting spot immediately,” the supplier said. Premiums that allow importers to make money in sending material to the US have been one factor in aluminium’s improving health over the past year, with buyers anxious to avoid “overpaying” for spot metal, this source noted.
“The rise in the premium is on the back of chit-chat,” according to a second supplier. He said most spot activity seen over the past week was due to traders attempting to cover their shorts ahead of a squeeze coinciding with tariff implementation, not driven by normal supply-demand fundamentals.
“From what we hear, it will be a straight pass-through, so supply will not change - just wildly inflationary with no positive effect,” a third supplier said.
Now it is up to Trump
While market participants that spoke with AMM seemed to believe that a 232 decision will likely focus more on Chinese aluminium overcapacity versus imports from elsewhere, a lot of uncertainty stems from the president himself.
For his part, Trump has said little publicly about the steel and aluminium investigations in recent months. A search of the president’s twitter account showed no mention of either metal or the 232 trade probe since early September
“With this White House, you don’t have any clue what will happen,” the second supplier said. Sanctions “could be approved but not do anything.”
“I guess this bullishness can be tied to pending trade issues, but to me, this is an industry that doesn’t look badly supplied,” Mothersole said. “Indeed, the forward curve has become backwardated, a sign of nearby tightness to be sure, but also a sign that the market expects this tightness to dissipate in the not-too-distant future. It will be interesting to see if the backwardation draws in inventory over the next couple of weeks.”
Aluminium prices on the London Metal Exchange have hovered close to a nearly six-year high
this month. The three-month contract closed the official session January 22 at $2,239 per tonne ($1.02 per tonne), and the daily cash price at $2,235 per tonne ($1.01 per tonne), for a narrow $4 spread between the two.
Although reports indicate that Trump wants to impose tariffs on metal imports
quickly, the president may find himself facing a full load of trade cases, including the Section 201 petition
for the US solar manufacturing industry.
“He’s got a lot on his plate, right?” the Washington-based source quipped. “Other things have deadlines coming quicker.”
Trump is expected to rule on the solar 201
case by Friday January 26, but there is no word if the government shutdown that began on Saturday January 20 may push that deadline back.
Michael Cowden, Chicago, contributed to this story.