Help Desk -
9958816305, 9810335381
Email
Password

Bleak Future Ahead For Europe’s Aluminum Industry - FACE

Metal News - Published on Tue, 18 Jun 2019

Image Source: POLITICO Europe
Politico EU reported that it’s May 2029, and all across the Continent, Europeans are driving to the polls to vote for the next European Parliament. Their routes take them past empty storefronts and shuttered factories, because despite decades of protests from the industry and empty promises from politicians, most of Europe’s main manufacturers have succumbed to the pressure of foreign competition and moved away.

As hundreds of thousands of jobs disappeared, once-thriving industrial regions turned into wastelands, rendering European markets dependent on imports of manufactured goods.

This might seem like an alarmist vision. But the strains on the EU’s aluminum sector, and the 1 million jobs that depend on it, raise worrying questions about the future of Europe’s industrial base in the absence of major policy changes. The industry’s growing vulnerability is a striking example of the inadequacy of public policies and industrial realities.

A forthcoming study by the LUISS University of Rome, commissioned by the Federation of Aluminium Consumers in Europe, shows, in this strategic sector, how far Europe is from bringing about the “industrial renaissance” that European Commission President Jean-Claude Juncker has called for.

As a voice dedicated to the downstream aluminum sector, FACE commissioned the study to establish comprehensive analysis of the competitiveness of the aluminum value chain in the European Union. The downstream segment accounts for approximately 70 percent of the EU industry’s annual turnover and more than 92 percent of its jobs.

The study’s findings should come as a painful wakeup call in Brussels. The downstream segment has been stagnating for the past 17 years, largely due to artificially higher costs for its raw material (unwrought aluminum) caused by an economically absurd import tariff structure for the metal, which ranges from 3% to 6%. This harmful situation has saddled the many small and medium enterprises in the downstream sector with crushing extra costs of up to EUR 1 billion per year.

The import tariff structure for the industry’s raw material unwrought aluminum was ostensibly implemented to protect Europe’s primary metal producers. But it has failed spectacularly. Not only have more than 10 smelters shut their doors over the past 20 years, with 3 million tons of production capacity lost, but Europe’s dependence on raw aluminum imports has widened from around 50% in 2000 to a stunning 74% in 2017.

At the same time, aluminum demand continues to grow in the EU, stimulated by climate policies and social environmental choices. This increased demand is being captured by competitors outside the EU, while European manufacturers of high value-added aluminum applications see their competitiveness eroding.

To cover the shortage of primary aluminum estimated at about 5.1 million tonnes in 2017 the downstream sector must increasingly import metal from dutiable suppliers, which costs more. In this low-margin industry, where the raw metal amounts to as much as 60 percent of the cost of a semi-finished product, these higher prices invariably lead to lost customers and shutdowns.

As a result, Chinese producers, who distort competition with unfair state support, underpriced exports and social and environmental dumping, have gobbled up a significant share of the market.

Source :

Posted By : Ratan Singh on Tue, 18 Jun 2019
Related News from Metal segment