EuroWire January 2017

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Transatlantic cable
January 2017 35
Among his campaign pledges was to “bring back steel.”
Additionally, his commitment to boosting infrastructure
spending brightens the outlook for American steel.
Much steel will be needed for all those new roads and bridges,
locks and dams, airports and railways. According to a Morgan
Stanley estimate cited by S&P Global Platts, candidate Trump’s
$550 billion stimulus plan would increase demand by 20 per cent
annually for ve years.
The calculation is for an incremental 22 million tons of steel
demand for each year the programme is in e ect.
Getting a huge infrastructure programme through Congress
is no easy matter. Passage was denied President Barack Obama
for years by Republicans, who still command a majority in both
houses. But Mr Balcerek thinks it will likely be di erent now.
He recalled the surprising move to open USA relations with
Red China proposed in 1972 by President Richard Nixon, a
Republican.
Could a left-leaning Democratic president have achieved
the historic breakthrough? Never. In that period of intense
anti-communist fervour in the USA, only the hard-liner Mr Nixon,
a reliably old-school crusader against communism, could muster
the popular support su cient to realise his purpose.
† Mr Balcerek sees a “Nixon-to-China situation” in the making
now. He asserted that a Republican – and only a Republican
– could push massive infrastructure spending through a
Republican Congress, something politicians of all stripes
know “in the back of their minds” is the single best way to
help their country. And Mr Trump is a Republican, if of fairly
recent provenance.
Moreover, wrote Mr Balcerek in S&P Global Platts, “Trump is a
builder, so construction is something he understands.”
Aluminium
Protesting a Chinese company’s bid for a
Cleveland area aluminium maker, lawmakers
assert injury to America’s industrial base
In a 2nd November letter addressed to Treasury Secretary Jack
Lew, a dozen US senators asked the Obama administration to
block a Chinese company’s $1.1 billion bid to take over a USA
aluminium manufacturer.
The senators said the deal should be rejected because it
would “directly undermine [our] national security, including
by jeopardising the USA’s manufacturing base for sensitive
technologies.”
Zhongwang USA LLC in August had agreed to buy Aleris Corp
(Beachwood, Ohio) from its private-equity owners in a deal that
would mark the highest price ever paid by a Chinese rm for an
American metals producer.
Zhongwang USA is an investment company owned by
Zhongwang International Group Ltd, the parent company of
China Zhongwang.
Liu Zhongtian, who controls Zhongwang USA and is also founder
and chairman of Chinese aluminium giant China Zhongwang
Holdings Ltd, has said the deal would o er a “complementary
business foothold”for his operations in America.
Scott Patterson, who covers nancial regulation for the Wall
Street Journal from Washington, DC, reported on the contents of
the senators’ letter, which asserted that Treasury’s Committee on
Foreign Investment in the USA – which can recommend blocking
or modifying foreign investments on national security grounds –
should take into account when a foreign investment deal “creates
potential for military know-how and sensitive technology to be
transferred to China’s government.”
Aleris, which has 14 plants around the world and annual revenue
of about $3 billion, has supplied aluminium plate used by the
American military, including for armoured vehicles. As reported
by Mr Patterson, an Aleris spokesman said less than one per cent
of the company’s 2015 volume went to defence applications,
none of which is produced in the USA.
A Zhongwang spokeswoman said the deal “will bring in
additional resources and capital” to Aleris, which will “continue
to be run independently.” (“A Dozen US Senators Ask Treasury to
Block Zhongwang Takeover of Aleris,” 2nd November)
† Based in eastern China, China Zhongwang is one of the
world’s biggest makers of aluminium extrusions used to
make goods such as car parts, appliances and window
frames. Mr Patterson took note of earlier Wall Street Journal
reporting on the company:
† In September, China Zhongwang was the subject of a
page-one article detailing allegations that rms linked to
Mr Liu had routed aluminium through Mexico in an e ort
to disguise its Chinese origin and avoid USA tari s. Mr Liu
denied any connection to the Mexico metal.
† Also in September, the Journal reported that the Commerce
Department was looking into whether a New Jersey
company, Aluminum Shapes LLC, had imported aluminium
pallets from China Zhongwang and then fabricated it as a
way around punitive tari s. Aluminum Shapes denied this,
saying it was only storing the metal.
Elsewhere in metals . . .
† Copper will surge more than 40 per cent from this year
through to 2020 as the global market swings to a shortage,
according to Japan’s biggest producer. These views echo
those of Citigroup Inc, the New York-based multinational
investment banking and nancial services corporation.
The metal essential for power generators and cables will
average $7,000 a metric ton in four years, up from $4,800
in 2016 and $5,200 this year, Pan Paci c Copper Co said in
a presentation on 3rd October in Tokyo. The expectation is
for demand to exceed supply by 52,000 tons in 2017 after a
surplus of 110,000 tons last year, with shortfalls continuing
through the end of the decade.
As reported by Masumi Suga and Ichiro Suzuki of Bloomberg
News (2nd October), Citigroup said the previous week that it
was optimistic on copper prices over the ensuing 12 months
because new supply had reached capacity and demand had
increased in China, the world’s biggest user.
Copper was the worst-performing metal on the London
Metal Exchange in the year through to September 2016 after
mine output surged in the rst half. The Australian banking
and nancial services corporation Macquarie Group Ltd cut
its September forecasts on “persistent oversupply.”
Dorothy Fabian
USA Editor