Hulamin shrugs off new US duty
Anti-dumping penalty could work in firm’s favour, says CEO Jacob
Hulamin has been slapped with an 8.9% anti-dumping duty in the US, but CEO Richard Jacob says the effect will be “neutral” at worst and potentially positive as it could help the company be more competitive in the US market.
“It looks like it will be, in a worst-case scenario, neutral and in a best-case scenario quite good for Hulamin,” said Jacob.
“Seven mills have slightly lower duties than us and 23 mills have duties that are greater than Hulamin. That is where the good news is. Most of our competitors are now relatively more disadvantaged than they were a couple of months ago versus Hulamin. The bottom line is we are now more competitive than we were prior to this preliminary outcome.”
The company reported this week that the US department of commerce had announced a preliminary outcome in the anti-dumping case brought by the US Aluminum Association against 38 rolling operations from 18 countries, including SA.
These duties, which become enforceable immediately, range from zero for Italy to up to 353% for Germany.
Investopedia defines dumping as the practice of exporting a “product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market”.
Hulamin said there were seven countries with import duties lower than SA’s, representing about 170,000t imported into the US in 2019, while 23 representative mills from other countries, exporting 392,000t to the US, faced higher tariffs than SA.
Hulamin said in a Sens statement that over the past two years it had exported between 32,000t and 36,000t of rolled aluminium affected by this duty annually to the US, which is the company’s second-biggest market.
It said the duties were imposed on common alloy aluminium rolled products and would not affect the rest of its aluminium exports to the US. But the newtariff is on top of a 10% aluminium duty the US imposed on countries, including SA, two years ago in terms of the US’s Trade Expansion Act.
Jacob said the duty imposed two years ago was not specifically an anti-dumping duty and was applied to all aluminium imports to the US.
In total the group exports 50,000t of aluminium in various forms to the US every year. As far as the Hulamin rolled products overall sales are concerned, the rolled sales to the US account for 15% of the total.
In terms of the latest tariff, Jacob said Hulamin has not been dumping product in the US. “Dumping is a very subjective term. It’s a term that people use when they’ve got some built-up emotion in the issue.
“As far as I’m concerned, it was a very technical investigation, politically motivated. An anti-dumping margin of 8.9% in my mind is a technical outcome. There are a lot of technical accounting issues that go into the calculation of those numbers. I’m very comfortable that Hulamin’s not dumping in the US.”
Jacob said governments used tariffs to raise domestic prices so their domestic mills got a higher margin.
“Effectively they [the US] are interfering in the supply-demand relationship. This is a political intervention to support rolling mills in the US ahead of the US election.”
The Aluminium Federation of SA said it “disagrees” with the findings in the US, but that the newly imposed tariffs “cover a wide enough supply base in the US market that, things being equal, South Africa with its 8.98
‘It’s a political intervention to support US mills ahead of the US election’
percent, will remain competitive”.
Afsa said the latest tariff “comes on top of an already existing 10% which was arbitrarily imposed by the US on all the countries a few years earlier”.
These earlier “restrictions signalled for us the US’s willingness to depart from acceptable trade rules as set out by the WTO [World Trade Organisation].”
Hulamin minority shareholder and competitor Volker Schütte, who has together with Chris Logan, MD of Opportune Investments, been pushing for management changes at Hulamin due to the company’s poor performance, said the US findings confirm his belief that Hulamin is dumping product in the US.
Schütte said: “I buy from Hulamin products, but I buy them in Europe and then ship them back to SA because it is cheaper. That doesn’t make any sense. This is not fair and it is a problem for the local industry.”
Jacob said the “truth is that the aluminium price goes up and the aluminium price goes down, so there will always be times when you can buy Hulamin products offshore that are cheaper because there is a timing difference”.
This week Hulamin reported that group sales in the third quarter to end-September increased to 45,000t from 29,000t in the second quarter — a sign that a modest recovery was under way.