Aluminum imports from the US break record

Mexican imports of aluminum and aluminum manufactures from the United States totaled 3,281 million dollars from January to August 2022, which represents a year-on-year increase of 34.3% and a record, according to data from the US Department of Commerce.

An analysis by the US Congress indicates that global demand for semi-finished aluminum products is expected to increase by up to 80% by 2050.

This could be significant for the outlook for US producers, particularly for exports of aluminum scrap and semi-finished products.

In addition, the Agreement between Mexico, the United States and Canada (USMCA), in force since July 2020, requires 70% North American aluminum content for automobiles and auto parts in order to qualify for duty-free trade.

According to the same analysis, this could increase demand for US and Canadian aluminum over time.

In the last decade, Mexican imports of aluminum and aluminum manufactures grew 53.2% cumulatively, from 2,141 million dollars from January to August 2011.

Today, the US and Canadian aluminum industries are highly interconnected.

In 2021, imports supplied 44% of the US aluminum market, up from 39% in 2020. More than half of US aluminum imports in that year came from Canada.

Canadian production of primary aluminum reached an estimated 3.13 million metric tons in 2021, more than three times that of the United States, and 81% of that production was exported to the United States.

Mexico is not a large producer of aluminum, but it does consume large volumes of North American aluminum. Through the first half of 2022, the United States exported 219,000 metric tons of aluminum semi-finished products, of which 59% went to Canada and 33% to Mexico.

During the same period, US imports of unwrought aluminum totaled 2.14 million metric tons, with more than 60% coming from Canada.

In the last decade, between 58 and 69% of the national supply of aluminum was exported each year. An important reason for the imbalance between production and consumption is that the United States is a large exporter of aluminum scrap, which accounted for 72% of the total export volume in 2021.

The analysis also highlights that Mexico, Malaysia and Canada were the three largest export markets, in that order, accounting for more than half of the total aluminum export volume of US mills.

Canada and Mexico import the vast majority of US non-scrap aluminum exports, including semi-finished products, as well as small volumes of unwrought aluminum and alloys.

The T-MEC contains new rules of origin for motor vehicles, which require a specific amount of North American content in the final vehicle in order to be eligible for duty-free treatment under the trade agreement.

Thus, the T-MEC raises the regional value content (RVC) requirements to 75% for passenger vehicles and light trucks, compared to 62.5% under NAFTA.

The USMCA also requires that at least 70% of a vehicle manufacturer’s steel and aluminum purchases originate in North America.

roberto.morales@eleconomista.mx