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Print[ferro-alloys.com]The Trump administration's tariffs on steel and aluminum have produced "mixed results" so far and should exempt close ally and neighbor Canada, Alcoa president and CEO Roy Harvey said Wednesday.
Alcoa Wednesday posted net income of $75 million or 39 cents/share for the second quarter on revenue of $3.5 billion, down from $150 million in Q1 and in line with $75 million in Q2 2017. It projected full-year 2018 global deficits for alumina and aluminum and a surplus for bauxite.
Partly because of the tariffs and the uncertainty they are having on global markets, Alcoa lowered its EBITDA forecast for this year to a range of $3 billion-$3.2 billion, from $3.5 billion-$3.7 billion earlier.
Harvey said that while Alcoa "appreciates" the Trump administration's efforts to defend US domestic steel and aluminum producers from unfair trading practices by foreign countries, the tariffs -- 25% on steel imports and 10% on aluminum imports -- have yielded uneven results to date.
Tariffs "do not remedy underlying structural issues," including smelting capacity in China, he said. Because tariffs are "driving only a limited increase in supply," US metals imports will remain substantial, he added.
In particular, Harvey said he was "disappointed" tariffs were slapped on Canada, where Alcoa operates three smelters.
Although tariffs have "pushed the Midwest premium higher, tariffs distort the market" while shielding uncompetitive smelters globally from the pressures of supply and demand, he asserted.
Harvey said Alcoa was maintaining "pretty active dialog" about the tariffs with various groups and individuals in Washington, including the US Commerce Department, whose Section 232 investigation into the impact of imports on national security led to the tariffs.
Alcoa now expects a larger global aluminum deficit in 2018, in the range of 1.1 million-1.5 million mt, up from its last quarter estimate of between 600,000 mt and 1 million mt.
Alumina is seen by Alcoa as having a slightly lower global deficit of between 200,000 mt and 1 million mt, versus last quarter's forecast of between 300,000 mt and 1.1 million mt.
Bauxite is expected to be in surplus globally throughout 2018 amid stockpile growth in China and increased exports from Guinea. Harvey told analysts that one of three restarting 50,000 mt/year aluminum-making potlines at Alcoa's Warrick Operations in southwestern Indiana may not be back on line until year end after it was idled May 25 by a brief power outage.
In response to a question, he said Alcoa has also "come back to the bargaining table" at the 450,000 mt/year Aluminerie de Becancour aluminum smelter in Quebec, Canada, where more than 1,000 union workers have been locked out since January 11.
But he did not predict an immediate resolution, saying: "We're focused on a long-term solution for that plant, long-term competitiveness versus competitors around the world. It's also a plant where we'd like to be investing in the future."
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- [Editor:王可]
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