U.S. Preparing 200% Tariff on Russian Aluminum to Protect American Producers

The U.S. is preparing a 200% tariff on Russian-made aluminum as soon as this week it was reported by, Bloomberg Monday. The White House National Security Council didn’t immediately respond to requests for comment. Before delivering sanctions, the US needs to be comfortable American industries, including aerospace and automobiles are not to be suffer collateral damages the sources said.

Alcoa Smelting

The move is in response to Russia dumping aluminum on the U.S. market and harming American companies such as Alcoa who reported disappointing earnings a few weeks ago. It also is in response to the Russian invasion of Ukraine over a year ago. Just last week A.P. Moller-Maersk said the U.S. had started to detain imports of aluminum products suspected of being made through forced labor from China’s Xinjiang region.

Russia is the world’s largest aluminum producer after China and in the past Russia accounted for ~10% of total U.S. imports. That has dropped to just more than 3%, according to US trade data. However, American imports of Russian aluminum had dropped to near zero in October as the administration weighed a ban, before rebounding to 11,600 tons in November and easing back to 9,700 tons in January.

Russia’s sole aluminum producer is United Co. Rusal International PJSC. Rusal shares in Moscow traded down as much as 3% on Monday after the news.

Aluminum Futures Prices

Aluminum hit an all-time high of around 4,100 USD/T in March 2022 in the aftermath of Russia’s invasion of Ukraine. Aluminum is down roughly 40% from that record high in March amid persistent fears of a demand-sapping global recession triggered by an aggressive tightening campaign from major central banks.

Aluminum futures traded on the LME on Monday briefly rose as much as 0.6% on news of the tariffs, before declining 1.7% to $2,526.50 a metric ton as of 3:25 p.m. London time.

US Aluminum Companies

The Aluminum Association, a trade group that represents the industry in the US, said in a statement Monday that “the aluminum industry stands in support of any and all efforts deemed necessary by the US government and its NATO allies” to address Russia’s invasion. “This is a global security and humanitarian disaster that goes far beyond the interests of any single industry.”

via Bloomberg

Alcoa reported Q4 earnings last month a second consecutive quarterly loss as expected and missed on revenue. The company has been squeezed by higher energy and raw material costs and restructuring charges putting pressure on margins.

Along with Alcoa other companies that may see benefit from the move are Century Aluminum (CENX), Constellium (CSTM) and Arconic (ARNC).

Source: Bloomberg, TC