The European Union Aluminium Industry the Impact of the Eu Trade Measures on the Competitiveness of Downstream Activities
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THE EUROPEAN UNION ALUMINIUM INDUSTRY THE IMPACT OF THE EU TRADE MEASURES ON THE COMPETITIVENESS OF DOWNSTREAM ACTIVITIES June 2019 GRUPPO DI RICERCHE INDUSTRIALI E FINANZIARIE - GRIF “FABIO GOBBO” LUISS GUIDO CARLI UNIVERSITY The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities 1 The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities Authors and contributors Ernesto Cassetta, GRIF “Fabio Gobbo”, University of Udine Umberto Monarca, GRIF “Fabio Gobbo”, University of Foggia Cesare Pozzi, GRIF “Fabio Gobbo”, LUISS University Davide Quaglione, GRIF “Fabio Gobbo”, D’Annunzio University of Chieti-Pescara Alessandro Sarra, GRIF “Fabio Gobbo”, D’Annunzio University of Chieti-Pescara GRUPPO DI RICERCHE INDUSTRIALI E FINANZIARIE - GRIF “FABIO GOBBO” Department of Business and Management LUISS Guido Carli University Viale Romania, 32 00197 Roma (Italia) 2 The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities 3 The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities Disclaimer This project has been funded with support from FACE - The Federation of Aluminium Consumers in Europe. We were asked by FACE to carry out an independent study with the aim of establishing a constructive and transparent exchange of views on the competitiveness of the aluminium value chain in the European Union with a specific focus on trade policies on unwrought aluminium and their impact on manufacturers of aluminium semi-finished products. To have consistent information and to ensure the robustness and the comparability of the quantitative analysis for well-informed design of policies, the study only relies on data provided by institutional sources and independent third parties, having market recognition for reliability. While also benefitting from the industry knowledge of FACE stakeholders, any views expressed herein, including interpretation(s) of policies, reflect the current views of the author(s), which do not necessarily correspond to the views of FACE. Reproduction, publication and reprint are subject to prior written authorisation of the authors. 4 The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities 5 The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities Table of contents Table of contents ......................................................................................................................................6 Tables and figures ....................................................................................................................................9 Glossary ..................................................................................................................................................14 Key findings ...........................................................................................................................................18 Executive summary ................................................................................................................................19 1. Introduction ....................................................................................................................................26 2. The EU aluminium value chain ......................................................................................................30 Overview ........................................................................................................................... 30 The aluminium production value chain ............................................................................. 32 The upstream ..................................................................................................................... 34 1.3.1. Bauxite mining .......................................................................................................... 34 1.3.2. Alumina Refinery Production.................................................................................... 36 1.3.3. Production of primary aluminium ............................................................................. 40 1.3.4. Production of secondary aluminium .......................................................................... 51 Semi-finished aluminium products .................................................................................... 54 1.4.1. Global and EU production ......................................................................................... 57 1.4.2. Global and EU consumption ..................................................................................... 61 1.4.3. Aluminium extrusions ............................................................................................... 65 1.4.4. Aluminium flat-rolled products ................................................................................. 71 1.4.5. Aluminium castings ................................................................................................... 77 3. Overview of unwrought and wrought aluminium EU Trade ..........................................................81 Trade flows of unwrought aluminium ............................................................................... 81 3.1.1. Imports of unwrought aluminium .............................................................................. 82 3.1.2. Exports of unwrought aluminium .............................................................................. 86 Trade flows of aluminium waste and scrap ....................................................................... 88 Trade flows of wrought aluminium ................................................................................... 89 6 The EU aluminium industry. The impact of the EU trade measures on the competitiveness of downstream activities 3.3.1. Extruded products ...................................................................................................... 91 3.3.2. Flat-rolled products ................................................................................................... 93 3.3.3. Castings ..................................................................................................................... 95 4. EU trade policies on unwrought aluminium and their impact on prices.........................................99 EU policies on import tariffs for unwrought aluminium ................................................... 99 Preferential Trade Agreements on import tariffs for unwrought aluminium and the inward processing trading regime ........................................................................................................... 104 Unwrought aluminium trade flows by tariff regime ........................................................ 105 4.3.1. Unwrought, not alloyed, aluminium ........................................................................ 105 4.3.2. Unwrought aluminium alloys .................................................................................. 107 4.3.3. Trade flows between duty-free and duty-paid countries ......................................... 109 Impact of import tariffs on EU market prices .................................................................. 110 4.4.1. Unwrought, not alloyed, aluminium ........................................................................ 112 4.4.2. Unwrought aluminium alloys .................................................................................. 114 4.4.3. Unwrought aluminium of secondary production ..................................................... 116 5. Estimates of the impact of import tariffs on unwrought aluminium on the aluminium industry value chain .....................................................................................................................................................118 Introduction ..................................................................................................................... 118 Methodology and main assumptions ............................................................................... 119 5.2.1. Scenario ................................................................................................................... 119 5.2.2. Information and data sources ................................................................................... 121 Results ............................................................................................................................. 122 5.3.1. Lower Bound Scenario ............................................................................................ 122 5.3.2. Upper Bound Scenario ............................................................................................ 124 5.3.3. Total extra-costs imposed by the EU import tariffs ................................................ 126 6. Assessing EU trade measures on unwrought aluminium from an industrial policy perspective ..128 Introduction ..................................................................................................................... 128 The EU primary aluminium deficit ................................................................................. 129 The rationale of EU import tariffs on unwrought aluminium.......................................... 130 The structural changes induced by import tariffs ...........................................................