U.S. moves to curb select aluminum and steel transshipments through Mexico
July 22, 2024
Key Observations:
Aluminum prices are under intense downward pressure following a July 10 White House “Proclamation on Adjusting Imports of Aluminum Into the United States”.
The logic of the Proclamation rests on these observations: (a) U.S. aluminum production capacity utilization remains below an 80% target set under previous Presidential decrees from the Trump and Biden Administrations, (b) U.S. imports of aluminum products from Mexico have “increased significantly” over the past five years, and (c) Mexico “lacks primary aluminum smelting capabilities, and the country of smelt or country of most recent cast is unknown for a significant volume of aluminum imports from Mexico”.
With immediate effect, the Proclamation establishes country of smelt and cast requirements for aluminum imports from Mexico and imposes additional duty for product that originates in China, Russia, Belarus, and Iran. In a separate decree on the same day, President Biden used executive authority to impose a melt and pour requirement on national origin of steel mill imports in a parallel effort to curb dumping of product into the U.S. via Mexico. Russian commodities are already subject to other U.S. trade restrictions.
Today front-month LME aluminum ranged wholly beneath its 200-day moving average to settle at $2259 per mt (-7.4% since Jul 9). Aluminum used beverage can (UBC) prices have fallen by 6.5% to 72 cents per lb. over the same interval.
Source: White House, Department of Commerce, Bloomberg, LNG, Blacklight Research.
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