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USITC Releases Report on Competitive Conditions Affecting the U.S. Aluminum Industry

The U.S. International Trade Commission (USITC) published Aluminum: Competitive Conditions Affecting the U.S. Industry, a report based on its recent 332 investigation conducted at the request of the U.S. House of Representatives Committee on Ways and Means. Focusing on the years 2011–15, the report assesses the strengths and weaknesses of major aluminum producing and exporting countries, provides qualitative and quantitative assessments of the impact of foreign government policies, identifies countries where primary unwrought aluminum capacity has substantially increased, and includes information on trade flows of aluminum through third countries.

The report states that U.S. primary unwrought aluminum segment shrank significantly during the years 2011-2015, while facing declining prices, relatively high production costs (i.e., electricity), and limited investments in smelting technologies. By contrast, the domestic secondary unwrought and wrought product segments expanded during the period, as secondary producers benefitted from access to abundant, low-cost aluminum scrap (their main input), while wrought producers took advantage of proximity to and close collaboration with their customers in the large and growing U.S. market.

Other highlights of the report include:

  • Global production of primary aluminum and wrought aluminum each rose by roughly 25% during 2011–15, driven largely by the dramatic growth of China’s output and consumption.
  • Export restraints significantly limited China’s exports of unwrought aluminum during 2011-15, while established suppliers such as Russia, Canada, Norway, and Australia continued as the world’s leading exporters. By contrast, China strengthened its position as the world’s leading exporter of wrought aluminum, followed by Germany and the United States.
  • The global primary aluminum market experienced severe price declines during 2011–15 due to oversupply and falling production costs, which produced divergent responses from producers. The United States shed 19 percent of its primary aluminum capacity between 2011 and 2015, while Europe lost 11 percent over this period. In contrast, China and the Gulf Cooperation Council countries expanded their capacity by more than 40 percent, despite the declining global prices over this time period.
  • The global aluminum industry is characterized by extensive government policies that affect all segments of the supply chain but are principally aimed at lowering production costs for primary unwrought aluminum.
  • The chief determinant of competitiveness for most primary aluminum producers is low electricity costs.  For secondary and wrought producers, the determinants are reliable scrap supplies and proximity to end-use markets, respectively. However, China is a major exception to these patterns. Despite new investments in highly cost-efficient smelters during 2011–15, China remained a relatively high-cost producer of primary aluminum and a leading player in secondary and wrought production despite lacking long-established end-markets.

Chapter 6 of the report focuses on China, and the chapter overview reads:

China’s aluminum industry and market grew rapidly during 2011–15. China is the largest global producer of both primary and wrought aluminum, and is a substantial producer of secondary aluminum (figure 6.1). China’s primary aluminum industry—which mainly serves the domestic market—significantly improved its technology and reduced production costs after 2011. As a result of these improvements, government policies, and the idling of high-cost production capacity, China’s average cash costs of production, which were substantially higher than those of the rest of the world in 2011, fell to within 1 percent of the rest of the world’s costs by the third quarter of 2016.462 The Chinese secondary industry continued to expand, but faced a number of challenges (including rising labor costs) that slowed growth. China’s wrought aluminum industry lowered its production costs, increased exports of commodity products, and moved into certain higher-value-added goods, such as aerospace sheet. However, there are other high-value-added industry segments (e.g., automotive sheet) in which China has only limited production.

The Aluminum Association, the Aluminium Association of Canada, and European Aluminium applaud the USITC for the Section 332 report that confirms oversupply is harming the global industry and that China’s capacity growth has far exceeded all other countries. The Associations reported that they are continuing to work with their respective governments towards a negotiated agreement with the Chinese government that result in measurable and consequent reductions in Chinese aluminum capacity and/or growth. That would address the fundamental problem directly and set the global industry – both upstream and downstream – on a course of expansion, rather than contraction, creating more jobs and more opportunities.

Aluminum: Competitive Conditions Affecting the U.S. Industry (Investigation No. 332-557, USITC publication 4703, June 2017) is available on the USITC’s Internet site at

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