Canada Aluminium Exports To EU Rocket After US Tariffs

Exports of primary aluminium from Canada to the EU have skyrocketed since the U.S. passed the Section 232 tariffs on steel and aluminium imports. Canadian exports to the EU are expected to increase further this year if the US – Canada’s traditional market – does not lift the tariffs, reports Argus Media.

The Trump administration put in place Section 232 tariffs in March 2018 on grounds of national security. The presidential orders imposed a 25 per cent tariffs on imported steel and 10 per cent on imported aluminium. Widely seen as a protective measure, the move impacted traditional importers to the US who have been scrambling for new markets for their metal.

Thanks to a free trade agreement with the EU, Canadian exporters enjoy duty free status on their metals. As a result, Canadian primary aluminium export to the EU increased eleven times to 15,927 tonnes in 2018 – up from 1,362 tonnes in 2017 – according to the latest trade data. Overall, Canada’s aluminium shipments to the EU in 2018 accounted for 4.5 per cent of the Union’s total annual imports of 353,279 tonnes.

At the same time, European aluminium consumers sought alternative suppliers after the US government threatened Russia’s Rusal with economic sanctions. Rusal reached a deal with the US Treasury at the end of January and said last week its business was back to normal and the company was confident to restore sales in its traditional markets.

In the meantime, Canada’s government was unsuccessful in its negotiations with the Trump administration despite a broad support base in both governments to lift Section 232 tariffs. While many government officials expressed hope for imminent removal of the tariffs to enable the ratification of the recently renegotiated USMCA trade agreement, Canada’s PM Trudeau’s was unable to swing Trump’s position.

The US still remains a preferred export market for Canadian aluminium producers due to its proximity and established supply chains. However, faced with the extra duty, these producers will look for new markets, including the EU.

“Lots of Canadians hope that maybe the [tariff] situation could change, so they can ship metal to the US. [But for now] they continue to sell spot to Europe,” commented a trader to Argus Media.

With an annual production of 3.2 million tonnes, Canada’s primary aluminium industry is the fourth largest in the world. Primary aluminium producers Alcoa, Aluminerie Alouette and Rio Tinto operate a total of 10 smelters in Canada – nine in Quebec and one in British Columbia.